Looking at Republic Services, Inc.’s (NYSE:RSG) earnings update in December 2018, analyst consensus outlook appear bearish, as a -0.5% fall in profits is expected in the upcoming year against the past 5-year average growth rate of 17%. Presently, with latest-twelve-month earnings at US$1.0b, we should see this fall to US$1.0b by 2020. Below is a brief commentary around Republic Services’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Republic Services going to perform in the near future?
The 12 analysts covering RSG view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 4.2% based on the most recent earnings level of US$1.0b to the final forecast of US$1.2b by 2022. This leads to an EPS of $4.01 in the final year of projections relative to the current EPS of $3.17. With a current profit margin of 10%, this movement will result in a margin of 11% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Republic Services, I’ve compiled three fundamental factors 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 Republic Services 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 Republic Services is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Republic Services? 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 email@example.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.