Critical Review: Republic Services (RSG) vs. Advanced Disposal (ADSW)

Republic Services (NYSE: RSG) and Advanced Disposal (NYSE:ADSW) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.

Insider & Institutional Ownership

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61.0% of Republic Services shares are held by institutional investors. 0.3% of Republic Services shares are held by insiders. Comparatively, 0.9% of Advanced Disposal shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Republic Services and Advanced Disposal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Republic Services 12.73% 10.61% 3.94%
Advanced Disposal 2.54% 5.03% 1.23%

Dividends

Republic Services pays an annual dividend of $1.38 per share and has a dividend yield of 2.1%. Advanced Disposal does not pay a dividend. Republic Services pays out 56.8% of its earnings in the form of a dividend. Republic Services has increased its dividend for 8 consecutive years.

Analyst Ratings

This is a summary of recent ratings for Republic Services and Advanced Disposal, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Republic Services 0 6 4 0 2.40
Advanced Disposal 0 1 6 0 2.86

Republic Services presently has a consensus price target of $69.86, suggesting a potential upside of 5.91%. Advanced Disposal has a consensus price target of $26.60, suggesting a potential upside of 16.62%. Given Advanced Disposal’s stronger consensus rating and higher probable upside, analysts clearly believe Advanced Disposal is more favorable than Republic Services.

Risk and Volatility

Republic Services has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Advanced Disposal has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Valuation & Earnings

This table compares Republic Services and Advanced Disposal’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Republic Services $10.04 billion 2.18 $1.28 billion $2.43 27.14
Advanced Disposal $1.51 billion 1.34 $38.30 million $0.47 48.53

Republic Services has higher revenue and earnings than Advanced Disposal. Republic Services is trading at a lower price-to-earnings ratio than Advanced Disposal, indicating that it is currently the more affordable of the two stocks.

Summary

Republic Services beats Advanced Disposal on 10 of the 17 factors compared between the two stocks.

Republic Services Company Profile

Republic Services, Inc., together with its subsidiaries, provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico. The company's collection services include curbside collection of waste for transport to transfer stations; supply of waste containers; and renting of compactors. It is also involved in the processing and sale of old corrugated containers, old newsprint, aluminum, glass, and other materials; temporary waste collection services; and provision of landfill services. As of December 31, 2017, the company operated through 343 collection operations, 204 transfer stations, 195 active landfills, 90 recycling centers, and 11 salt water disposal wells, as well as 7 treatment, recovery, and disposal facilities in 40 states and Puerto Rico. It also operated 68 landfill gas and renewable energy projects and had 124 closed landfills. The company was founded in 1996 and is based in Phoenix, Arizona.

Advanced Disposal Company Profile

Advanced Disposal Services, Inc. provides non-hazardous solid waste collection, transfer, recycling, and disposal services. It is involved in the curbside collection of residential refuse from small carts or containers into collection vehicles for transport to a disposal/recycling site. The company also supplies commercial and industrial customers with waste containers; rents or sells compactors to large waste generators; and provides roll-off containers, as well as waste collection, transportation, and disposal services to construction and demolition sites. In addition, it offers landfill disposal services; and manages or operates recycling facilities that collect, process, and sell old corrugated cardboard, old newspaper, mixed paper, aluminum, glass, and other materials, as well as provides customer services. Further, the company engages in trucking activities; and landfill gas-to-energy operations at municipal solid waste landfills, as well as manages third-party owned landfills. It serves approximately 2.8 million residential customers; 200,000 commercial and industrial customers; and 800 municipalities in the Southeast, Midwest, and Eastern regions of the United States, as well as the Commonwealth of the Bahamas. The company was formerly known as ADS Waste Holdings, Inc. and changed its name to Advanced Disposal Services, Inc. in January 2016. Advanced Disposal Services, Inc. was founded in 2000 and is headquartered in Ponte Vedra, Florida.

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