We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Republic Services Banks on Internal Growth, Debt Woes Stay
Read MoreHide Full Article
Republic Services, Inc. (RSG - Free Report) is currently benefitting from solid demand for the recycling of waste products and strong internal growth, which are boosting the top line.
Recently, the company delivered mixed fourth-quarter 2018 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings per share (EPS) of 80 cents outpaced the consensus mark by 2 cents and improved 31.1% year over year. Revenues of $2.53 billion lagged the Zacks Consensus Estimate by $6.2 million but improved 2.6% year over year on a pro-forma basis.
Republic Services has an impressive surprise history. The company beat estimates in each of the trailing four quarters, the average being 2.8%. For the first quarter of 2019, the consensus mark is unchanged at 75 cents per share in the past 60 days.
Factors that Bode Well for the Company
Republic Services continues to grow internally on the back of long-term contracts for the collection, recycling and disposal of solid waste materials. Such agreements increase the company’s contracted revenue base and strengthen market position. Notably, in 2018, revenue growth included a positive impact of 2.5% internal growth. Increasing demand for the recycling of waste products is another major positive for the company.
Furthermore, the company focuses on improving operational efficiency by shifting to compressed natural gas (CNG) collection vehicles and converting rear-loading trucks to automated-side loaders, which reduce cost and improve profitability. In 2018, almost 13% of the replacement vehicle purchases were CNG vehicles.
Moreover, we are impressed with Republic Services’ consistent record of returning value to shareholders in the form of dividend and share repurchases. The company paid dividends of $461.8 million, $440.5 million and $418.9 million in 2018, 2017 and 2016, respectively. Also, the company repurchased shares worth $736.9 million, $610.7 million and $403.8 million in 2018, 2017 and 2016, respectively. Such moves reflect the company’s commitment to create value for shareholders and underline confidence in the business.
Republic Services continues to face weak landfill pricing due to high cost of landfills and leachate. This limits the company’s ability to increase prices, improve operating margins and make necessary investments.
Also, the company has a debt-laden balance sheet which may limit future expansion and worsen its risk profile. As of Dec 31, 2018, long-term debt (net of current maturities) was $7.65 billion while cash and cash equivalents were $70.5 million.
A few better-ranked stocks in the Zacks Business Services sector are General Finance Corporation , National CineMedia, Inc. (NCMI - Free Report) and Everi Holdings Inc. (EVRI - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for General Finance Corporation, National CineMedia and Everi Holdings is 14.3%, 38.5% and 20%, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Image: Bigstock
Republic Services Banks on Internal Growth, Debt Woes Stay
Republic Services, Inc. (RSG - Free Report) is currently benefitting from solid demand for the recycling of waste products and strong internal growth, which are boosting the top line.
Recently, the company delivered mixed fourth-quarter 2018 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. Adjusted earnings per share (EPS) of 80 cents outpaced the consensus mark by 2 cents and improved 31.1% year over year. Revenues of $2.53 billion lagged the Zacks Consensus Estimate by $6.2 million but improved 2.6% year over year on a pro-forma basis.
Republic Services has an impressive surprise history. The company beat estimates in each of the trailing four quarters, the average being 2.8%. For the first quarter of 2019, the consensus mark is unchanged at 75 cents per share in the past 60 days.
Factors that Bode Well for the Company
Republic Services continues to grow internally on the back of long-term contracts for the collection, recycling and disposal of solid waste materials. Such agreements increase the company’s contracted revenue base and strengthen market position. Notably, in 2018, revenue growth included a positive impact of 2.5% internal growth. Increasing demand for the recycling of waste products is another major positive for the company.
Furthermore, the company focuses on improving operational efficiency by shifting to compressed natural gas (CNG) collection vehicles and converting rear-loading trucks to automated-side loaders, which reduce cost and improve profitability. In 2018, almost 13% of the replacement vehicle purchases were CNG vehicles.
Moreover, we are impressed with Republic Services’ consistent record of returning value to shareholders in the form of dividend and share repurchases. The company paid dividends of $461.8 million, $440.5 million and $418.9 million in 2018, 2017 and 2016, respectively. Also, the company repurchased shares worth $736.9 million, $610.7 million and $403.8 million in 2018, 2017 and 2016, respectively. Such moves reflect the company’s commitment to create value for shareholders and underline confidence in the business.
Republic Services, Inc. Price
Republic Services, Inc. Price | Republic Services, Inc. Quote
Risks
Republic Services continues to face weak landfill pricing due to high cost of landfills and leachate. This limits the company’s ability to increase prices, improve operating margins and make necessary investments.
Also, the company has a debt-laden balance sheet which may limit future expansion and worsen its risk profile. As of Dec 31, 2018, long-term debt (net of current maturities) was $7.65 billion while cash and cash equivalents were $70.5 million.
Zacks Rank & Stocks to Consider
Currently, Republic Services carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the Zacks Business Services sector are General Finance Corporation , National CineMedia, Inc. (NCMI - Free Report) and Everi Holdings Inc. (EVRI - Free Report) , each carrying a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for General Finance Corporation, National CineMedia and Everi Holdings is 14.3%, 38.5% and 20%, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>