Back to top

Image: Bigstock

Republic Services (RSG) Up 22.8% YTD: What's Driving It?

Read MoreHide Full Article

Shares of Republic Services Inc. (RSG - Free Report) have gained 22.8% on a year-to-date basis.


Let’s delve deeper into the factors which have contributed to the company’s outperformance.

Consecutive Earnings Beats

Republic Services reported better-than-expected earnings performance in the first three quarters of 2019. The company’s consistent initiatives in controlling costs and capitalizing on favorable solid waste management trends have helped it price in excess of cost inflation and improve its operating performance. Further, it has been continuously investing in acquisitions to strengthen its market position. We believe these strategic moves have benefited the company’s bottom line.

Upbeat 2019 EPS Guidance

Republic Services raised its 2019 guidance for adjusted earnings. The company now expects adjusted earnings of $3.28-$3.30 per share compared with the prior guided range of $3.23-$3.28.

Internal Growth

Republic Services continues to grow internally with the help of long-term contracts for collection, recycling and disposal of solid waste materials. Such agreements increase its contracted revenue base, thereby strengthening its market position. Further, the company continues to look out for strategic price increase in order to offset increased costs, improve operating margins and enjoy an appropriate return on its substantial investments in vehicles, equipment, landfills, transfer stations and recycling centers. Increasing demand for the recycling of waste products is another major positive for Republic Services’ business. Notably, revenues include a 2.1% impact of internal growth during the first nine months of 2019.

Zacks Rank & Stocks to Consider

Currently, Republic Services carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics (CATM - Free Report) . While Global Payments and Cardtronics sport a Zacks Rank #1 (Strong Buy), Mastercard carries a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 15.9% and 4%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>