Republic Services Inc (RSG)

Conclusion

Republic Services is a US environmental services company that collects, recycles and disposes of solid, industrial and hazardous waste, with operations in the United States and Canada. On 2026-11-09 the share price was 246.78 USD, giving a market capitalisation of 75.2 billion USD.

The verdict is fair. The fair value band runs from 194.71 to 292.06 USD with a midpoint of 243.38 USD, and the margin of safety is -1.4% at the current price. Against their own ten-year medians, the P/E is 33.76 versus 29.94 and EV/EBITDA is 15.54 versus 14.55, while P/FCF is 22.71 versus 24.81. The DCF gives 267.90 USD per share, and the fair value from historical multiples is 218.87 USD. The reverse DCF implies growth of 7.05% a year, against a five-year revenue CAGR of 10.32% and a five-year free cash flow per share CAGR of 14.11%.

The case rests on a return on invested capital of 10.12% against a WACC of 8.10%, a trailing free cash flow conversion of 148.7%, and eight earnings beats in eight quarters. It would weaken with a current ratio of 0.75, net debt of 2.47 times EBITDA, and a price-to-book of 6.14 against a ten-year median of 4.10.

Financial health

Financial strength is yellow: the Altman Z-score of 3.18 and the insolvency estimate support it, while the current ratio of 0.75 and the net debt to EBITDA of 2.47x weigh on it. The current ratio is 0.75 and the quick ratio is 0.65, both as of 2026-09-30, so short-term liabilities exceed liquid current assets. Net debt to EBITDA is 2.47x on a trailing basis and interest coverage is 5.37x, which is adequate but not generous. Debt to equity is 1.17. The Altman Z-score is 3.18, in the safe zone, though the model was designed for manufacturers and this company is not one. Insolvency risk: low, about 0.8% by the estimate of the Ohlson model over one to two years, based on 2025-12-31 figures.

Earnings quality

Earnings quality is green: cash conversion, the Beneish reading and the share count all hold up, while the Piotroski score is only moderate. Free cash flow conversion is 148.7% on a trailing basis and 111.4% over five years, and the accrual ratio is -6.5%, meaning cash earnings exceed reported earnings. Free cash flow after stock-based compensation is 3.31 billion USD, but stock-based compensation itself is not available. The share count fell at a compound rate of 0.5% over five years, which points to buybacks. The Piotroski score is 6 out of 9. The Beneish M-score is -2.88, which is in the unlikely range. The company beat estimates in all eight of the last quarters, with an average surprise of 4.9%. Estimate revisions for the current year were slightly negative, with a 90-day change of -0.14%, and for next year a 90-day change of -0.71%, with seven downward revisions against ten upward in the last 30 days for next year.

Profitability

Profitability is green, with margins above their ten-year medians and returns on invested capital above the cost of capital. The gross margin is 39.2% against a median of 28.9%, the operating margin is 20.1% against 17.8%, and the net margin is 12.9% against 11.2%. Operating margin stability is 6.55%. ROIC is 10.12% against a WACC of 8.10%, and the given ROIC minus WACC value is 2.02%, labelled as creating value. The five-year median ROIC is 9.56%. The DuPont split shows a net margin of 12.89%, an asset turnover of 0.48 and an equity multiplier of 2.87. Return on equity of 18.2% is therefore largely the product of leverage rather than of operations alone.

Growth

Growth is green: revenue and per-share earnings have compounded at double-digit rates over the recent five years. Revenue compounded at 7.1% over three years, 10.3% over five years and 6.2% over ten years. Earnings per share compounded at 13.5%, 17.8% and 12.4% over the same periods. Free cash flow per share compounded at 12.2% over three years, 14.1% over five and 14.0% over ten. Revenue grew in eight of the ten comparable years. Consensus expects earnings per share to grow 10.1% next year, though recent estimate revisions were slightly negative.

Valuation

Valuation is yellow: the price is close to the fair value midpoint, and several multiples trade above their own history. The P/E is 33.76 against a ten-year median of 29.94, a premium of 12.8%, and EV/EBITDA is 15.54 against 14.55, a premium of 6.8%. P/FCF of 22.71 is below its median of 24.81, a discount of 8.5%. Price-to-sales of 4.36 is 41.6% above its median of 3.08, and price-to-book of 6.14 is 49.9% above its median of 4.10. The DCF gives 267.90 USD per share using a discount rate of 8.87%, a 10.08% near-term growth rate and 2.5% terminal growth; the terminal value makes up 58.9% of that figure. The fair value band rests on fixed assumptions, including a 5% equity risk premium and capped growth, so it is an order of magnitude rather than a price target. The reverse DCF implies 7.05% growth. The dividend yield is 1.28% and the payout on free cash flow is 29.1%.

Risks

The main risks are liquidity, leverage and a valuation that already prices in strong growth. A current ratio of 0.75 means the company depends on steady cash generation or refinancing to meet short-term obligations. Net debt of 2.47 times EBITDA and interest coverage of 5.37x leave less room if earnings fall. A price-to-book of 6.14 against a median of 4.10 is exposed to any slowdown in returns, and the 58.9% terminal value share makes the DCF sensitive to long-term assumptions. Stock-based compensation is not available, so its effect on earnings cannot be assessed. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing timing and the contribution of each business line remain unknown.