RSG

Paper: Value and Momentum Within Stocks, Too

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Please select the image below to download, “Value and Momentum Within Stocks, Too:” Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks. To download the full report, please click here (pdf). ———- Actual results … Read more

Republic Services Showcases Pricing Strength, Raises Dividend

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Image: Republic Services’ stock has been consistently strong since the beginning of 2023. By Brian Nelson, CFA On July 24, Republic Services (RSG) reported better than expected second quarter results with both revenue and non-GAAP earnings per share exceeding the consensus forecast. Second quarter total revenue growth was 8.6% consisting of 5.6% organic expansion and 3% growth from acquisitions. Though volumes faced some pressure in the quarter, Republic Services continues to display pricing power, with average yield and total price increasing 5.5% in the three months ended June 30. Republic’s second quarter adjusted EBITDA came in at $1.26 billion, with its adjusted EBITDA margin expanding 110 basis points on a year-over-year basis, to 31.1% of total revenue. On an adjusted … Read more

Waste Management to Acquire Stericycle

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Image: Waste Management’s shares have done quite well the past 12-18 months. By Brian Nelson, CFA On June 3, Waste Management (WM) confirmed a prior report from the Wall Street Journal that it would acquire medical waste services company Stericycle (SRCL). The news comes a week or so after Stericycle said it was exploring a sale of the company. Waste Management will acquire Stericycle for $62 per share in cash, or for an enterprise value of ~$7.2 billion after considering Stericycle’s net debt. The agreed-upon price represents a ~24% premium to the company’s 60-day volume weighted average price as of May 23, 2024, or the last trading day before the report that made public Stericycle was up for sale. There … Read more

Republic Services Covers Dividends with Free Cash Flow By a Nice Margin

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Image: Republic Services’ stock has had a fantastic run during the past couple years. By Brian Nelson, CFA On April 30, Republic Services (RSG) reported mixed first quarter with revenue coming in a bit light on the top line, but the trash taker handily beating expectations on the bottom line. During the first quarter, total revenue growth was 7.8% consisting of 4.1% coming from organic means, while 3.7% coming from growth though acquisitions. The company faced some volume pressure in the period, but core price on total revenue advanced an impressive 7%. We are off to a strong start to the year and well-positioned to achieve our full-year goals. Continued pricing in excess of cost inflation generated double-digit growth in … Read more

Republic Services Issues Solid Guidance for 2024

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Image Source: Republic Services By Brian Nelson, CFA On February 27, trash taker Republic Services (RSG) reported excellent fourth-quarter results that showed beats on both the top and bottom lines. Total revenue advanced 8.6% in the quarter, consisting of 5.7 percentage points of organic growth and 2.9 percentage points coming from acquisitions. The firm’s pricing initiatives continue to bear fruit, with core price on total revenue increasing 7.2% in the quarter. Volume increased revenue by 0.3% in the period. Thanks in part to its pricing strength, the firm’s adjusted EBITDA margin increased 260 basis points from last year’s quarter. Adjusted earnings per share advanced 24.8% in the quarter, a very strong showing. Republic Services is one of our favorite industrial … Read more

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?

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Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. By Brian Nelson, CFA We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key … Read more

Waste Management’s Pricing Power Is Fantastic, Sustainability Initiatives Are Noble

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Image Source: TheInvertedFan By Brian Nelson, CFA Industry economics in the municipal solid waste industry are generally easy to understand. Industry pricing power essentially emanates from disposal operations. Waste generated, for example, must end up somewhere, and therefore whichever entity has the disposal operations has the power to set the bar with respect to pricing, directly or indirectly, from transfer facilities all the way through collections within certain regions. After all, garbage pick-up operators won’t be in business for long if they have to pay more to dispose of waste than they charge to pick it up. It may not be a glamourous business, but it is a very good one, and those with disposal operations tend to rule the … Read more

12 Reasons to Stay Aggressive in 2024

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By Brian Nelson, CFA 1. The Fed has signaled that rate cuts could start with inflation at a 2 handle (2 point something) and not at exactly 2.0%. That means that the Fed may become anticipatory to prevent overshooting to the downside with inflation. We see this as positive for long-duration equities, particularly those whose free cash flow generation is robust in the out-years, inclusive of big cap tech and the stylistic area of large cap growth. 2. Unemployment is at structural lows of 3.7%. Employers are working hard to keep talent on board, and with each paycheck, employees are pumping more and more money into the stock market via retirement accounts. This tailwind remains a stiff one and will … Read more

ICYMI — Video: Our Top Stocks for 2024

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Video: Valuentum’s President of Investment Research Brian Nelson walks through the success of Valuentum’s newsletter suite, the state of the economy and markets, and offers his favorite idea for each sector. Tune into this must-watch video. ———- It’s Here!  The Second Edition of Value Trap! Order today!   —– Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.  Valuentum members have access to our 16-page stock … Read more

Cash Cow Republic Services’ ESG Initiatives Bearing Fruit

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Image Source: Gabriel Langton By Brian Nelson, CFA Republic Services remains our favorite garbage hauler. The company is a cash cow, and it continues to drive dividend growth as it buys back shares. When it reported third-quarter results on October 26, the firm showed strong adjusted earnings per share expansion, to $1.54, up from $1.34 in last year’s period. For the first nine months of the year, the firm grew cash flow from operations to ~$2.7 billion, up from ~$2.38 billion during the same period last year, driving strong adjusted free cash flow generation of ~$1.8 billion, materially higher than the ~$470 million in cash dividends it paid over the same period. The board authorized $3 billion for share repurchases, … Read more