Republic Services, Inc. RSG has had a remarkable run over the past year. The company’s shares have jumped 35.7% in that period compared with its industry and the Zacks S&P 500 composite’s growth of 11.6% and 13.2%, respectively.

RSG’s revenues are anticipated to increase 5.3% and 5.1% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 6.7% in 2025 and 9.7% in 2026.

Factors That Augur Well for RSG’s Success

Rapid urbanization, population boom and swift adoption of zero-waste initiatives across North America have expanded the solid waste management market. This market is estimated to touch $77.3 billion in 2025 and then increase to $89.6 billion in 2030, at a CAGR of 3% during the  2025-2030 period. Republic Services can capitalize on this growth easily, capturing a greater share of the pie, leading to an improvement in its top line. Banking on this expansion, we anticipate RSG’s revenues to grow 5.1% in 2025.

The United Nations Environment Programme estimates that global municipal solid waste will increase from 2.1 billion tons in 2023 to 3.8 billion tons in 2050. This surge in solid waste will necessitate an increase in collection frequency, which will compel people to pay more for the rising demand. RSG’s collection segment will benefit from this situation immensely. This segment has contributed approximately 68% to the top line across the past three quarters and is expected to improve further on the back of higher subscription fees charged by the company.

RSG’s dividend payments and share repurchase strategy reward shareholders consistently. The company has stood by this strategy despite the fluctuations in its cash position, underscoring its dedication to returning value to investors. In 2022, 2023 and 2024, it paid $592.9 million, $650 million and $687 million in dividends and repurchased shares worth $203.5 million, $261.8 million and $482 million, respectively. This makes Republic Services’ shares more appealing to dividend-seeking investors as well as those who seek to benefit from share price appreciation.

Risks Faced by Republic Services

RSG’s current ratio in the first quarter of 2025 was 0.67 lower than the industry average of 1.04. Despite the metric improving from the preceding quarter’s 0.58 and the year-ago quarter’s 0.53, it stood lower than one, implying that the company may have difficulties in paying short-term obligations. A weak liquidity position is frowned upon by investors, hurting RSG’s financial position.Zacks Investment Research

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The company operates in a fiercely competitive industry. Among the many players, municipalities are a massive threat to its market share as these organizations maintain their own waste collection and disposal activities, and benefit from tax revenues and tax-exempted financing. Increasing competitive pressure necessitates the need for innovation and differentiation while maintaining cost efficiency. This compels the company to invest in technology and talent, increasing the difficulty in balancing growth and profitability.

Story Continues

RSG’s Zacks Rank & Stocks to Consider

The company has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are Cintas CTAS and Conduent CNDT,each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cintas has a long-term earnings growth expectation of 13.2%. CTAS delivered a trailing four-quarter earnings surprise of 7.6%, on average.

Conduent has a long-term earnings growth expectation of 8%. CNDT delivered a trailing four-quarter earnings surprise of 5.9%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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