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Why Republic Services (RSG) Is Up Today

NEW YORK (TheStreet) -- Republic Services (RSG) was gaining 5.9% to $33.76 Friday after its quarterly earnings report beat analyst estimates for earnings and revenue.

For the fourth quarter Republic Services posted earnings of 53 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 46 cents a share for the quarter. The company posted revenue of $2.14 billion, compared to analyst estimates of $2.11 billion.

In its guidance for 2014 Republic Services expects earnings between $1.93 and $1.98 a share. Analyst estimates call for earnings of $1.98 a share for the year. The company expects revenue to rise by 3.5% to 4.5% year-over-year.

Must read: RSG, WM, FAST And WY, Pushing Materials & Construction Industry Downward

TheStreet Ratings team rates REPUBLIC SERVICES INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REPUBLIC SERVICES INC (RSG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 39.15% is the gross profit margin for REPUBLIC SERVICES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.91% is above that of the industry average.
  • Net operating cash flow has slightly increased to $375.70 million or 3.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.65%.
  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that RSG's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
  • You can view the full analysis from the report here: RSG Ratings Report

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