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Why Republic Services (RSG) Gained 16.3% in the Past Year

Shares of Republic Services, Inc. RSG have rallied 16.3% in the past year, primarily on operational efficiency and investor-friendly steps.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Reasons for Upside

Republic Services is focused on increasing its operational efficiency by shifting to compressed natural gas (CNG) collection vehicles and converting rear-loading trucks to automated-side loaders, which will reduce cost and improve profitability. RSG aims to enhance its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities. In 2021, almost 13% of the replacement vehicle purchases were CNG vehicles.

We are impressed with Republic Services’ consistent efforts in rewarding its shareholders through dividend payments and share repurchases. In 2021, 2020 and 2019, RSG paid out $552.6 million, $522.5 million and $491.2 million of dividends each and repurchased shares worth $252.2 million, $98.8 million and $399.4 million, respectively. Such moves reinforce RSG’s commitment to creating value for its shareholders and underline its confidence in business. These initiatives raise investors’ optimism on the stock and boost the earnings per share.

Favorable Estimate Revision

Driven by the above tailwinds, the Zacks Consensus Estimate for current-year earnings has moved up 2.4% to $4.78 per share in the past 60 days.

Zacks Rank and Stocks to Consider

Republic Services currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. CAR, Automatic Data Processing, Inc. ADP and CRA International, Inc. CRAI.

Avis Budget sports a Zacks Rank #1 at present. CAR has an earnings growth rate of 108.4% for 2022.

Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.

ADP carries a Zacks Rank #2 (Buy) at present. ADP has a long-term earnings growth expectation of 12%.

ADP delivered a trailing four-quarter earnings surprise of 5%, on average.

CRA International carries a Zacks Rank of 2, currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 26%, on average.


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