The Phoenix-based waste management company will perform in-line with Barclays' positive view of the environmental services industry, the firm said.
"The waste disposal industry is a core public infrastructure providing investors relatively stable and predictable returns," Barclays said in a note.
The environmental services industry's positive rating was driven by a stable demand outlook and companies' ability to grow incremental EPS through tuck-in acquisitions and share repurchases, Barclays added.
"The key risk to our recommendation is a weaker-than-expected new housing construction in 2016, which is a key driver of demand volatility," the firm said. "Barclays expects a continuing, yet modest, recovery in housing in 2016."
Shares of Republic Services were up by 0.77% to $43.46 in early-morning trading on Thursday.
Separately, TheStreet Ratings team rates REPUBLIC SERVICES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate REPUBLIC SERVICES INC (RSG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its 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:
- RSG's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 38.55% 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 8.23% is above that of the industry average.
- Net operating cash flow has increased to $405.10 million or 24.30% when compared to the same quarter last year. In addition, REPUBLIC SERVICES INC has also modestly surpassed the industry average cash flow growth rate of 16.75%.
- You can view the full analysis from the report here: RSG