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Republic Services Hits a New 52-Week High: What's Aiding It?

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Shares of Republic Services Inc. (RSG - Free Report) scaled a new 52-week high of $90.64 in the trading session on Jan 6, before closing a tad lower at $90.60.

The company’s shares have charted a solid trajectory in recent times, appreciating 23.9% over the past year, ahead of the 22.2% growth of the industry it belongs to.

 

Notably, Republic Serviceshas witnessed a 2% rise in share price since it posted third-quarter 2019 results.

Let’s find out what’s supporting the uptick.

Consecutive Earnings Beat

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 business moves have benefited the company’s bottom line.

Upbeat 2019 EPS Guidance

Republic Services raised its 2019 guidance for adjusted earnings per shareto$3.28-$3.30from $3.23-$3.28 projected earlier. The midpoint of the new guidance indicates growth of 6.5% from the reported figure in 2018.

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 benefiting its top line.  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 S&P Global (SPGI - Free Report) , Accenture (ACN - Free Report) and Booz Allen Hamilton (BAH - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS (three to five years) growth rate for S&P Global, Accenture and Booz Allen Hamilton is 10%, 10.3% and 13%, respectively.

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