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What Should We Expect From Republic Services, Inc.'s (NYSE:RSG) Earnings In The Next Couple Of Years?

Simply Wall St

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Republic Services, Inc.'s (NYSE:RSG) latest earnings announcement in December 2018 signalled that the business endured a substantial headwind with earnings declining by -19%. Below, I've laid out key numbers on how market analysts perceive Republic Services's earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Republic Services

Market analysts' consensus outlook for next year seems pessimistic, with earnings reducing by -0.5%. But in the following year, there is a complete contrast in performance, with reaching double digit 7.7% compared to today’s level and continues to increase to US$1.2b in 2022.

NYSE:RSG Past and Future Earnings, April 2nd 2019

While it is helpful to understand the rate of growth each year relative to today’s level, it may be more beneficial to analyze the rate at which the business is growing every year, on average. The benefit of this method is that we can get a bigger picture of the direction of Republic Services's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.2%. This means that, we can expect Republic Services will grow its earnings by 4.2% every year for the next few years.

Next Steps:

For Republic Services, I've compiled three essential aspects you should further research:

  1. 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.
  2. 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.
  3. 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!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.