Republic Services, Inc.'s RSG shares have risen 16.7% in the past six months, outperforming the industry and the Zacks S&P 500 composite’s growth of 9.5% and 12.8%, respectively.

Six Months Price Performance

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Republic Services reported mixed third-quarter 2024 results. Earnings per share (excluding 1 cent from non-recurring items) of $1.8 outpaced the Zacks Consensus Estimate by 11.7% and grew 17.5% from the year-ago quarter. Revenues of $4.1 billion marginally missed the consensus mark but increased 6.5% year over year.

A Look at Republic Services' Performance 

Republic Services, which is a leading waste disposal company, is anticipated to continue gaining from trends such as rising environmental concerns, swift industrialization, population explosion and policies implemented by the government to lower illegal dumping.

The company is finding ways to expand its recycling volume via improved material handling processes and programs. RSG developed its first Polymer Center last year to boost the recycling of plastics across North America. Such advancements are one of many factors that led RSG to witness a rise of 10.8% in 2023 in its top line and lead us to believe that the figure will increase 7.4% in 2024.

Republic Services is focused on increasing its operational efficiency and lowering fleet operating costs by switching to compressed natural gas (CNG) collection vehicles. Approximately 20% of the company’s recycling and solid waste collection fleet ran on CNG and 13% of its replacement recycling and solid waste vehicle purchases were CNG vehicles in 2023.

RSG puts consistent efforts into rewarding its shareholders via dividend payments and share repurchases. In 2023, 2022 and 2021, the company paid $650 million, $592.9 million and $552.6 million in dividends and repurchased shares worth $261.8 million, $203.5 million and $252.2 million, respectively.

The aforementioned strategies indicate the company’s commitment to creating value for its shareholders and underline the confidence in RSG’s business. These initiatives not only instill investors’ confidence in the stock but also positively impact the bottom line.

Risks Faced by RSG

Republic Services' current ratio (a measure of liquidity) at the end of third-quarter 2024 was 0.64, higher than the year-ago quarter's 0.58. Despite an increasing current ratio, it is less than 1 which indicates that the company might have to face problems in paying off its short-term obligations.

In 2023, the company's fuel costs amounted to $541.6 million, increasing 3.6% of its revenues. Republic Services depends on purchasing fuel from the open market to operate its collection and transfer trucks and equipment for environmental services. Fuel prices are dynamic due to various factors. The company may encounter challenges in completely tackling the increasing fuel costs through fuel recovery fees due to contractual or market constraints.

RSG’s Zacks Rank & Stocks to Consider

Republic Services carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks in the broader Zacks Business Services sector are Parsons PSN and Qifu Technology, Inc. QFIN.

Parsons sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PSN has a long-term earnings growth expectation of 18.6%. It delivered a trailing four-quarter earnings surprise of 17.5%, on average.

Qifu Technology flaunts a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 20.9%.

QFIN delivered a trailing four-quarter earnings surprise of 12.4%, on average.

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