RSG 203.5 (+1.15%)
US7607591002Waste ManagementWaste Management

Last update on 2024-06-07

Republic Services (RSG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Explore the Piotroski F-Score Analysis of Republic Services (RSG) for 2023. Discover the company's financial health and investment potential with a score of 7/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Republic Services (RSG) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Republic Services (RSG) has been analyzed using the Piotroski 9-criteria scoring system. The company scored 7 out of 9, indicating a strong financial position. The profitability analysis shows strong, positive net income, favorable operating cash flow, and an increasing return on assets. The liquidity analysis reveals concerns with leverage and the current ratio. The operating analysis indicates a positive gross margin but a slight decrease in the asset turnover ratio.

Insights for Value Investors Seeking Stable Income

Republic Services (RSG) demonstrates solid financial health with consistent profitability and efficient management. However, there are areas of concern, particularly with leverage and the current ratio. Investors should consider these factors and keep monitoring these metrics. Overall, RSG appears to be a potentially strong investment, but it's important to review further details and the industry context before making a decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Republic Services (RSG)

Company has a positive net income?

Check if Netincome of 1731000000 in 2023 is positive or negative. If the Netincome is positive, add 1 point. If not, set it to 0.

Historical Net Income of Republic Services (RSG)

Republic Services (RSG) reported a net income of $1,731,000,000 in 2023, which is positive. This allows us to add 1 point based on the Piotroski criterion. Historically, Republic Services has consistently achieved positive net income over the last 20 years. The latest figure marks a continuing upward trend from $1,487,600,000 in 2022 and is significantly higher than $1,290,400,000 in 2021. The sustained positive net income over this extended period underscores the company's steady profitability and sound financial health, with the 2023 figure representing the highest net income within the provided historical range. This trend is highly favorable as it indicates robust profitability and efficient management.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion checks whether the company is generating positive cash flows from its core operating activities. This is crucial as it reflects the company's ability to generate sufficient cash to sustain and grow its operations.

Historical Operating Cash Flow of Republic Services (RSG)

For the year 2023, Republic Services (RSG) reported a Cash Flow from Operations (CFO) of $3.62 billion. This figure is markedly positive and indicates that the company is generating ample cash from its core operations. Analyzing the historical data, it is evident that the company's CFO has been consistently improving over the past 20 years, growing from $600.5 million in 2003 to $3.62 billion in 2023. This steadily upward trend signifies robust operational efficiency and effective cash management strategies. Given the positive CFO for 2023, Republic Services would add 1 point in this criterion, portraying a financially healthy and operationally strong company.

Return on Assets (ROA) are growing?

Return on Assets (ROA) assesses a company's ability to generate earnings relative to its assets. Tracking changes in ROA helps investors evaluate management efficiency and asset profitability over time.

Historical change in Return on Assets (ROA) of Republic Services (RSG)

In 2023, Republic Services (RSG) reported an ROA of 0.0573, compared to 0.0551 in 2022. This increment signifies an improvement in asset utilization to generate profit, thus adding 1 point in the Piotroski analysis. However, when juxtaposed with the industry median ROA, which ranges from 0.3002 to 0.3934 over the past two decades, Republic Services' ROA falls well below the industry median. Despite this an increase year-over-year is a positive signal. Therefore, this trend is considered good for the given criterion.

Operating Cashflow are higher than Netincome?

The Piotroski score criterion assesses whether a company's operating cash flow is higher than its net income.

Historical accruals of Republic Services (RSG)

For Republic Services (RSG), the operating cash flow in 2023 is $3,617,800,000, while the net income is $1,731,000,000. As the operating cash flow is markedly higher than the net income, this is a favorable trend. Historically, operating cash flow has consistently been higher than net income, particularly showing strong performance in recent years. For instance, in 2019, operating cash flow was $2,352,100,000 compared to a net income of $1,073,300,000, and in 2022, these figures were $3,190,000,000 and $1,487,600,000, respectively. This trend is enheartening as it suggests that the company is generating ample cash from its operations, which aids in enhancing liquidity and financial stability. Hence, Republic Services earns 1 point for this criterion.

Liquidity of Republic Services (RSG)

Leverage is declining?

Change in Leverage measures the change in the company's capital structure. A decrease would imply improved financial health.

Historical leverage of Republic Services (RSG)

Republic Services' leverage ratio has increased from 0.3982 in 2022 to 0.3847 in 2023, signifying a worsening in the company’s debt level relative to its equity. In this analysis, higher leverage might increase financial risk, as it indicates a higher proportion of debt. Historically, leverage peaked in 2022, and this recent increase is concerning, given the generally stable trend in prior years. Therefore, Republic Services earns a score of 0 on this criterion.

Current Ratio is growing?

The change in the current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets and is a key indicator of financial health.

Historical Current Ratio of Republic Services (RSG)

Comparing the Current Ratio of 0.5631 in 2023 with 0.6952 in 2022, the current ratio has actually decreased. This indicates that the company's ability to cover its short-term liabilities has deteriorated slightly over the past year. Historically, looking at data for the last 20 years, Republic Services' current ratio rarely exceeds 1, reflecting a consistent alignment with its operational model, which may involve efficient working capital management. For instance, the highest current ratio in the last 20 years was 1.1117 in 2004, and the lowest was 0.4656 in 2010. Comparatively, the industry median current ratio has generally stayed above 1, with a noticeable dip to 0.949 in 2023. Nevertheless, this historical consistency in the lower range of the current ratio should be cautiously analyzed in the context of how Republic Services manages its short-term assets and liabilities against the industry standards.

Number of shares not diluted?

In Piotroski Analysis, a decrease in shares outstanding indicates a reduction in equity financing and usually suggests strong earnings and positive business performance.

Historical outstanding shares of Republic Services (RSG)

According to the data, Republic Services' outstanding shares have decreased from 316,500,000 in 2022 to 316,200,000 in 2023. This slight decrease of 300,000 shares lends a positive interpretation under the Piotroski Analysis, implying strategic buybacks or improved profitability—an encouraging sign of financial health. Looking back over the last two decades, the trend has largely been a reduction in outstanding shares, decreasing from 243,150,000 in 2003 to the current figures. It's crucial, however, to observe that after 2008, the shares outstanding spiked to over 380,000,000, suggesting possible acquisitions or equity financing, but stabilized subsequently. Thus, for 2023, we add 1 point for a favorable trend, aligned with reduced equity financing and stronger fundamentals for Republic Services.

Operating of Republic Services (RSG)

Cross Margin is growing?

The change in Gross Margin criterion looks at whether a company's Gross Margin has increased compared to the previous year, which can indicate better operational efficiency or improved cost management.

Historical gross margin of Republic Services (RSG)

For Republic Services (RSG), the Gross Margin in 2023 was 0.4024, compared to 0.3927 in 2022. This increase in Gross Margin suggests improved operational efficiency or better cost management. Hence, 1 point is awarded in the Piotroski Analysis for this criterion. Furthermore, RSG's Gross Margin has consistently remained above the industry median, which was 0.3375 in 2023, showcasing its superior profitability metrics over time. The long-term data also indicates a generally upward trend in Gross Margin, signifying steady operational improvements.

Asset Turnover Ratio is growing?

Asset Turnover ratio measures a firm's efficiency at using its assets to generate earnings. It is calculated by dividing net sales by total assets. A higher ratio indicates better performance.

Historical asset turnover ratio of Republic Services (RSG)

Analyzing Republic Services’ (RSG) Asset Turnover ratios, the latest figures show a slight decrease from 0.5003 in 2022 to 0.495 in 2023. This marks a downturn in the company’s ability to efficiently use its assets to generate sales compared to the previous year. Despite this decrease, examining the trend over the past 20 years reveals a cyclical pattern in asset turnover, with a notable dip in 2008 during the financial crisis. Recently, however, the figures show an improvement from a low of 0.3022 in 2008 to nearly 0.5 in recent years, underlining a long-term positive trend albeit with short-term fluctuations. Given the criterion, for 2023 no point should be awarded as the ratio did not increase.


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