The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies with no revenue, no profit and a history of failure can successfully find investors. Unfortunately, these high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson. Loss-making companies can act as a sponge for capital – so investors should be careful not to throw good money after bad.

So if this idea of ​​high risk and high reward doesn’t sit well with you, you might be more interested in profitable and growing businesses, like Republic Services (NYSE:RSG). While that doesn’t necessarily mean it’s undervalued, the company’s profitability is enough to warrant some appreciation, especially if it’s growing.

How fast is Republic Services growing earnings per share?

If you think markets are even remotely efficient, you expect a company’s share price to follow its earnings-per-share (EPS) performance over the long term. Therefore, there are many investors who like to buy shares in companies that grow EPS. Republic Services managed to increase EPS by 11% per year, over three years. That’s a good growth rate, if it can be sustained.

It is often useful to look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another idea of ​​the quality of the company’s growth. Republic Services maintained stable EBIT margins over the past year, while growing revenue 16% to $12 billion. It is progress.

You can check the company’s revenue and profit growth trend in the table below. Click on the table to see the exact numbers.

NYSE: RSG Earnings and Revenue History as of October 21, 2022

The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. While crystal balls don’t exist, you can check out our consensus analyst forecast visualization for Republic Services’ future EPS 100% free.

Are Republic Services insiders aligned with all shareholders?

We wouldn’t expect to see insiders owning a large percentage of a $42 billion company like Republic Services. But thanks to their investment in the company, it’s nice to see that there are still incentives to align their actions with those of shareholders. Indeed, they hold for 48 million dollars of its shares. This considerable investment should contribute to generating long-term value in the company. Even though that’s only about 0.1% of the company, it’s enough money to indicate alignment between company executives and common stockholders.

It’s good to see that insiders are invested in the company, but are the compensation levels reasonable? A brief analysis of CEO compensation suggests they are. For companies with a market capitalization greater than $8.0 billion, such as Republic Services, the median CEO salary is around $13 million.

The CEO of Republic Services earned total compensation worth US$7.9 million in the year to December 2021. That seems pretty reasonable, especially considering it’s below the median of companies of similar size. While the level of CEO compensation should not be the most important factor in how the company is perceived, modest compensation is positive because it suggests that the board has the best interests in mind. shareholders. It can also be a sign of good governance more generally.

Should you add Republic services to your watch list?

An important and encouraging feature of Republic Services is that it increases its profits. The fact that EPS is growing is a real plus for Republic Services, but the nice image is better than that. With company insiders significantly aligning with the company’s success and modest CEO compensation, there’s no arguing that this is a stock worth considering. Again, the ubiquitous specter of investment risk must be taken into account. We have identified 2 warning signs with Republic Services, and understanding them should be part of your investment process.

While Republic Services certainly looks good, it could attract more investors if insiders buy shares. If you like seeing insiders buy, then this free list of growing companies that insiders are buying might be exactly what you are looking for.

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.