Premier waste management firm Republic Services, Inc. RSG is scheduled to report its first-quarter 2015 results after the closing bell on Apr 23. In the last reported quarter, quarterly earnings exceeded the Zacks Consensus Estimate by a couple of cents. Let’s see how things are shaping up for this announcement.
Key Factors in the First Quarter
Republic Services recently completed the acquisition of Tervita, LLC – an environmental waste solutions subsidiary of Tervita Corporation, for an undisclosed amount. Tervita offers 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. The acquisition is expected to strengthen Republic Services’ presence in the E&P (Exploration & Production) waste sector and positions it well for harnessing future growth opportunities.
Republic Services is expected to benefit from Tervita's expertise and penetration in the U.S markets. With the help of Tervita, Republic Services is expected to improve on its environmental protection front while achieving growth in its major activities of waste handling, recovery and disposal. Such quality acquisitions, primarily of recycling assets, are likely to act as a catalyst for healthy long-term growth within its top 25 markets.
The company is also focusing on enhancing its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities. 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. The company has strong underlying fundamentals and is set to achieve consistent earnings growth and create shareholder value.
Earnings Whispers
However, our proven model does not conclusively show that Republic Services is likely to beat earnings this quarter as it lacks the key ingredients for a success recipe.
Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This indicates a likely in-line earnings for the shares.
Zacks Rank: Republic Services’ Zacks Rank #3 (Hold) when combined with 0.00% ESP reduces the predictive power of ESP. Note that stocks with a Zacks Ranks of #1 (Strong Buy), #2 (Buy) and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Waste Management, Inc. WM, earnings ESP of +2.04% and Zacks Rank #2.
Popular, Inc. BPOP, earnings ESP of +9.86% and Zacks Rank #1.
Huntington Ingalls Industries, Inc. HII, earnings ESP of +2.91% and Zacks Rank #2.
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