For most investors, the change in a stock’s price over time is important. This factor can affect your investment portfolio and help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, especially with tech giants and popular consumer stocks.
What if you had invested in Republic Services (RSG) ten years ago? It might not have been easy to hold on to RSG all this time, but if it was, how much would your investment be worth today?
Deepening of Republic Services activities
With that in mind, let’s take a look at the main business drivers for Republic Services.
Republic Services is the second largest provider of non-hazardous solid waste collection, transfer, disposal, recycling and energy services in the United States. As of December 31, 2020, the company operated facilities in 41 states and Puerto Rico through 345 collection operations, 220 transfer stations, 186 active landfills, 76 recycling centers, seven treatment, recovery and disposal facilities, 9 salt water disposal well. The company is engaged in 75 gas to energy and renewable energy conversion projects in landfills and was responsible after the closure of 128 closed landfills. The was incorporated in Delaware in 1996.
The company generates income primarily from its solid waste collection operations. The remaining revenue comes from other services, which include transfer station, landfill disposal, recycling and energy services.
The Collection Services unit (75% of 2020 revenue) provides commercial, residential, industrial and other services. Residential collection operations are carried out under contracts with municipalities and include the collection of waste from containers in collection vehicles and dumped at transfer stations or landfills. Commercially and industrially, the company supplies its customers with waste containers and rents compactors to large waste producers.
The Transfer Services unit (6%) deposits the waste in its transfer stations. Transfer stations provide cost-effective collection operations to consolidate waste and reduce transportation costs. Income is generated by charging extras or disposal fees. The company owns or operates 207 transfer stations.
Landfill service revenues (13%) are generated by dumping fees billed to third parties. The landfill unit undertakes highly technical systems with several layers of environmental protection to increase their overall energy production. The company owns or operates 190 active landfills.
Recycling Services revenues (3%) are generated from the processing and sale of old corrugated cardboard containers (OCC), waste newsprint (ONP), aluminum, glass and other materials. The company owns or operates 91 recycling processing centers.
The activity of environmental services (2%) varies from one market zone to another depending on the natural resource basins in which the drilling activity takes place and reflects the regulatory environment, pricing and alternatives. disposal available in a given market.
Anyone can invest, but building a successful investment portfolio takes research, patience, and a bit of risk. So if you had invested in Republic Services ten years ago, you are probably feeling pretty happy with your investment today.
By our calculations, an investment of $ 1,000 made in October 2011 would be worth $ 4,530.37, or a gain of 353.04%, as of October 22, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 267.44% and the price of gold rose 4.53% over the same period.
Looking ahead, analysts expect more upside for RSG.
Shares of Republic Services have outperformed its sector over the past year, in part due to battered earnings over the past four quarters and raised expectations. The company is focused on increasing its operational efficiency by switching to compressed natural gas collection vehicles and converting rear-loading trucks to automated side loaders to reduce costs. The company continues to grow internally through long-term contracts for the collection, recycling and disposal of solid waste. The consistency of dividend payments and share buybacks strengthens investor confidence and has a positive impact on earnings per share. However, operating the company in a highly competitive solid waste industry is of concern. High leverage can limit the company’s future expansion and worsen its risk profile. Seasonality continues to act as a major headwind.
In the past four weeks, stocks have risen 5.39% and there have been 2 higher earnings estimate revisions in the past two months for FY2021 compared to none lower. The consensus estimate has also increased.
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