Republic Services, Inc.

Republic Services’ third-quarter were an all-around beat and the company has proven its ability to manage its cost structure and expand the business while still growing economically, despite increased market volatility. Cost pressures are still high and more persistent. Republic Services is using its tools and technologies to price ahead of cost inflation and create margin expansion in the underlying business in the face of these cost challenges. Customer demand is quite robust and encourages further volume expansion. They are well-positioned to take advantage of market growth prospects due to their strong business fundamentals and laser-like focus on the needs of their customers. Besides, they continue to make use of their cash flow to carry out relevant acquisitions. The management has spent $2.6 billion on acquisitions, including U.S. Ecology. During the quarter, they also acquired Moring Disposal. Additionally, they are speeding up the development of polymer centers and anticipate investing an additional $40 million to begin construction on future sites. Overall, the foundation of their business stays strong despite the recent reductions in the recycled goods price, rising interest rates, and rising fuel expenses. We give the company a ‘Hold’ rating with a revised target price.