COMPANY DESCRIPTION
Republic Services is engaged as a provider of non-hazardous solid waste collection, transfer station, recycling and disposal services. As of Dec 31 2013, Co. provided non-hazardous solid waste collection services for commercial, industrial, municipal and residential customers through 336 collection operations in 39 states and Puerto Rico. In addition, Co. owned or operated 199 transfer stations, 190 active solid waste landfills and 69 recycling centers. Co. also operated 69 landfill gas and renewable energy projects. Co. manages its operations through three geographic regions: East, Central, and West, which Co. has identified as its reportable segments.
ECONOMIC MOAT
In our opinion RSG has an economic moat do to it landfill assets. In the waste disposal industry, landfill ownership is a formidable barrier to entry, as EPA regulations support high fixed costs for landfill siting, development, operation, and monitoring.
OUTLOOK
Outlook remains solid as RSG. Republic's healthy free cash flow and sound balance sheet, we would not be surprised to see more accretive deals in 2015 and beyond. Strategic acquisitions are big part of RSG’s growth plan. RSG appears to be trading at fair value. RSG is a solid long-term defensive play with a good dividend.
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STRENGTHS
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Command on the entire waste management value chain
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Varied customer base
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Strong operating platform
WEAKNESSES
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Legal proceedings
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Lack of geographical diversification
THREATS
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Intense competition
Federal and state regulatory constraints -
Fluctuations in prices for recycled commodities
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Weather conditions
OPPORTUNITIES
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Increase in demand for environmental services
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Expansion of recycling capabilities Expansion of business
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
