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Republic Services, Inc.’s (NYSE:RSG) released its most recent earnings update in December 2018, which indicated that the company experienced a major headwind with earnings declining by -19%. Investors may find it useful to understand how market analysts predict Republic Services’s earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems rather muted, with earnings expanding by a single digit 0.3%. The following year doesn’t look much more exciting, though earnings does reach US$1.2b in 2022.
Even though it’s informative understanding the rate of growth each year relative to today’s level, it may be more beneficial evaluating the rate at which the company is moving every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Republic Services’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.0%. This means, we can presume Republic Services will grow its earnings by 4.0% every year for the next couple of years.
For Republic Services, I’ve compiled three fundamental aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is RSG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RSG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RSG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.