Stock of the Day

February 25, 2022

Republic Services (RSG)

$230.73
-$0.13 (-0.1%)
Market Cap: $72.09B

About Republic Services

Republic Services, Inc., together with its subsidiaries, offers environmental services in the United States and Canada. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions. Its residential collection services include curbside collection of material for transport to transfer stations, landfills, recycling centers, and organics processing facilities; supply of recycling and waste containers; and renting of compactors. The company also engages in the processing and sale of old corrugated containers, old newsprint, aluminum, glass, and other materials; and provision of landfill services. It serves small-container, large-container, and residential customers. The company was incorporated in 1996 and is based in Phoenix, Arizona.

Republic Services Bull Case

Here are some ways that investors could benefit from investing in Republic Services, Inc.:

  • Strong Earnings Performance: Republic Services, Inc. reported earnings per share (EPS) of $1.58, exceeding analysts' expectations of $1.37, indicating robust financial health and effective management.
  • Consistent Dividend Payments: The company announced a quarterly dividend of $0.58 per share, translating to an annualized dividend of $2.32, which offers a yield of 1.00%. This consistent return can be attractive for income-focused investors.
  • Stable Market Position: With a market capitalization of $72.33 billion, Republic Services, Inc. is a significant player in the environmental services sector, providing stability and potential for growth.
  • Positive Return on Equity: The company has a return on equity of 18.18%, which indicates effective management in generating profits from shareholders' equity, a positive sign for potential investors.
  • Current Stock Price: As of now, the stock price is around $210.65, which is near its 50-day moving average, suggesting a stable price trend that may appeal to investors looking for less volatility.

Republic Services Bear Case

Investors should be bearish about investing in Republic Services, Inc. for these reasons:

  • High Debt-to-Equity Ratio: The company has a debt-to-equity ratio of 1.07, indicating that it relies significantly on debt to finance its operations, which could pose risks in a rising interest rate environment.
  • Lower Revenue Compared to Estimates: In its latest earnings report, Republic Services, Inc. reported revenue of $4.05 billion, slightly below the consensus estimate of $4.08 billion, which may raise concerns about growth potential.
  • Dividend Payout Ratio: The current dividend payout ratio is 37.12%, which, while sustainable, indicates that a significant portion of earnings is being returned to shareholders rather than reinvested in the business for growth.
  • Market Volatility: The stock has a beta of 0.74, suggesting lower volatility compared to the market, but this could also mean limited upside potential during market rallies.
  • Recent Insider Selling: There have been notable insider sales, including the CFO selling over 5,000 shares, which could signal a lack of confidence in the company's short-term prospects.

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