Comparing Republic Services (NYSE:RSG) and Xylem (NYSE:XYL)

Xylem (NYSE:XYL) and Republic Services (NYSE:RSG) are both large-cap business services companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, risk, profitability, earnings and analyst recommendations.

Dividends

Xylem pays an annual dividend of $1.60 per share and has a dividend yield of 1.3%. Republic Services pays an annual dividend of $2.50 per share and has a dividend yield of 1.1%. Xylem pays out 40.8% of its earnings in the form of a dividend. Republic Services pays out 36.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Xylem has increased its dividend for 2 consecutive years and Republic Services has increased its dividend for 22 consecutive years.

Volatility & Risk

Xylem has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, Republic Services has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Insider & Institutional Ownership

88.0% of Xylem shares are owned by institutional investors. Comparatively, 57.7% of Republic Services shares are owned by institutional investors. 0.3% of Xylem shares are owned by company insiders. Comparatively, 0.1% of Republic Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Xylem and Republic Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xylem	0	4	9	0	2.69
Republic Services	0	9	14	0	2.61

Xylem presently has a consensus target price of $158.08, indicating a potential upside of 24.10%. Republic Services has a consensus target price of $245.62, indicating a potential upside of 11.05%. Given Xylem’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Xylem is more favorable than Republic Services.

Profitability

This table compares Xylem and Republic Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Xylem	10.59%	11.11%	7.22%
Republic Services	12.90%	18.44%	6.51%

Earnings and Valuation

This table compares Xylem and Republic Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xylem	$9.04 billion	3.43	$957.00 million	$3.92	32.49
Republic Services	$16.59 billion	4.12	$2.14 billion	$6.85	32.29

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

Summary

Republic Services beats Xylem on 9 of the 17 factors compared between the two stocks.

About Xylem

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. It operates through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services. The Water Infrastructure segment offers products, including water, storm water, and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment and rental services under the ADI, Flygt, Godwin, Sanitaire, Magneto, Neptune Benson, Ionpure, Leopold, Wedeco, and Xylem Vue brands. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, Xylem Vue, and Flojet brands. The Measurement & Control Solutions segment offers smart meters, networked communication devices, data analytics, test equipment, controls, sensor devices, software and managed services, and critical infrastructure services; and software and services, including cloud-based analytics, remote monitoring and data management, leak detection, condition assessment, asset management, and pressure monitoring solutions, as well as testing equipment. This segment sells its products under the Pure Technologies, Sensus, Smith Blair, WTW, Xylem Vue, and YSI brands. The Integrated Solutions and Services segment provides maintenance services, mobile services, digital outsourced solutions, wastewater systems, environmental remediation, odor and corrosion control, filtration, reverse osmosis, ion exchange, and deionization under Aquapro, WaterOne, and Ion Pure brands. Xylem Inc. was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in May 2011. Xylem Inc. was incorporated in 2011 and is headquartered in Washington, District of Columbia.

About Republic Services

Republic Services, Inc., together with its subsidiaries, offers environmental services in the United States and Canada. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions. Its residential collection services include curbside collection of material for transport to transfer stations, landfills, recycling centers, and organics processing facilities; supply of recycling and waste containers; and renting of compactors. The company also engages in the processing and sale of old corrugated containers, old newsprint, aluminum, glass, and other materials; and provision of landfill services. It serves small-container, large-container, and residential customers. The company was incorporated in 1996 and is based in Phoenix, Arizona.