On Jan 3, 2014, Zacks Investment Research upgraded Republic Services Inc (RSG) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold). The upgrade came largely on the back of the company’s focus to grow inorganically. The stock is currently trading at a forward P/E of 19.7x with long-term earnings growth expectation of 6.1%.
Why the Upgrade
Republic Services recently entered into an agreement to acquire Tervita, LLC – an environmental waste solutions subsidiary of Tervita Corporation, for an undisclosed amount. Tervita is a premium quality service provider offering oilfield waste services and operates three kinds of waste management and disposal facilities. It has a proven track record of efficient safety and regulatory compliance across its entire operational footprint in North America. This acquisition is expected to strengthen Republic Services in the E&P (Exploration & Production) waste sector and position it well for harnessing future growth opportunities.
Republic Services is the second largest domestic non-hazardous solid waste company in the U.S. The company is currently focusing on a series of quality acquisition opportunities, primarily of recycling assets, which is likely to act as a catalyst for healthy long-term growth..
At the same time, Republic Services is committed to its long-term strategy, which involves the maintenance of a healthy cash flow and a disciplined approach to cash utilization. In addition, the company has a healthy liquidity position and has historically returned considerable cash to shareholders through periodic dividend hikes and share repurchases.
In the last reported quarter, the company repurchased 43.5 million shares under this program for $1,316.5 million at an average price of $30.28 per share, including 0.6 million shares bought back for $21.4 million at $38.60 per share. The company has strong underlying fundamentals and is set to achieve consistent earnings growth and create shareholder value.
Other Stocks to Consider
Other stocks that look promising in the industry and are worth a look include The Hackett Group, Inc (HCKT) carrying a Zacks Rank #1 (Strong Buy), and NV5 Holdings, Inc. (NVEE) and Quest Resource Holding Corporation (QRHC), both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment