Republic Services (RSG) Well Poised For Long-Term Growth

On Jun 29, Zacks Investment Research updated the research report on waste management services provider, Republic Services, Inc. (NYSE:RSG) .

Republic Services Inc. is the second largest domestic, non-hazardous solid waste disposal company in the U.S., in terms of revenues. It provides its services for commercial, industrial, municipal and residential applications through a network of 340 collection centers in 39 states and Puerto Rico. The company owns or operates 201 transfer stations, 8 treatment, recovery and disposal facilities, 12 salt water disposal wells,193 solid waste landfills, 69 landfill gas and renewable energy projects and 67 recycling facilities.

The company is currently focusing on increasing its operational efficiency by adopting compressed natural gas collection vehicles. It is also planning on replacing the rear-loading trucks with automated-side loaders to reduce costs and improve profitability. At the same time, Republic Services is focused on enhancing its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities.

In addition, the company is realigning its field support functions by combining two organizational layers into one and it expects these initiatives to contribute approximately $25 million of annual cost savings from 2018. Over the years, the company has returned significant cash to its shareholders as dividends or share repurchases. Further, it has a history of maintaining a conservative balance sheet and healthy liquidity position.

However, margin pressure remains a bottleneck for the company. Margins are expected to remain constrained in the next quarters as Republic Services has more exposure to Collection services and less to Disposal services. Typically, the Disposal services generate the highest margins while the Collection services generate the lowest one.

Nevertheless, we remain impressed with the strong underlying fundamentals of this Zacks Rank #2 (Buy) stock, which is likely to achieve consistent earnings growth in the near future. Some other favorably placed stocks in the industry include Waste Connections Inc. (NYSE:WCN) , US Ecology, Inc. (NASDAQ:ECOL) and Waste Management, Inc. (NYSE:WM) , each carrying the same Zacks Rank as Republic Services.

WASTE MGMT-NEW (WM): Free Stock Analysis Report

REPUBLIC SVCS (RSG): Free Stock Analysis Report

WASTE CONNECTN (WCN): Free Stock Analysis Report

US ECOLOGY INC (ECOL): Free Stock Analysis Report

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