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Why Should You Retain Republic Services in Your Portfolio?

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Shares of Republic Services, Inc. (RSG - Free Report) have gained 24.5% over the past year, outperforming the 18% rally of the industry it belongs to.

With expected long-term earnings per share growth rate of 9.5% and a market cap of $27 billion, Republic Services seems to be a stock that investors should retain in their portfolios now.

What Bode Well?

Republic Services continues to benefit from its differentiation strategy that focuses on strengthening market position, improving quality of human resource, enhancing customer experience and boosting operational efficiency through scale and technology.

The company is growing internally with the help of long-term contracts for collection, recycling and disposal of solid waste materials. In first-quarter 2019, revenue growth of 1.8% year over year, included a positive impact of 1.3% internal growth. Strong pricing is a significant driver of revenues.

Republic Services, Inc. Revenue (TTM)

 

Republic Services’ consistent rewarding of shareholders through dividend payments and share repurchases instill investors’ confidence and positively impact earnings per share. In 2018, 2017 and 2016, the company paid $461.8 million, $440.5 million and $418.9 million in dividends and repurchased shares worth $736.9 million, $610.7 million and $403.8 million, respectively.

Last Words

Despite riding on significant growth prospects, Republic Services is not free from overhangs. The company’s top and bottom lines continue to experience pressure from decline in recycled commodity prices. However, we believe that with strong pricing across businesses, the company will be able to offset this headwind going forward.

Zacks Rank & Stocks to Consider

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

Some top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting (NCI - Free Report) , WEX (WEX - Free Report) and FLEETCOR Technologies . While Navigant Consulting sports a Zacks Rank #1 (Strong Buy), WEX and FLEETCOR carry a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rate for Navigant Consulting, WEX and FLEETCOR is 13.5%, 15% and 16.5%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

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