REPUBLIC SERVICES, INC. (RSG): what the price requires
At today's price, REPUBLIC SERVICES, INC. (RSG) is priced for +8.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/RSG
Headline
| Field | Value |
|---|---|
| Ticker | RSG |
| Company | REPUBLIC SERVICES, INC. |
| Current price | $223.14/sh |
| Composition | Collection 68% / Transfer, net 5% / Landfill, net 12% / Environmental solutions, net 11% / Other 5% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.8% |
| Operating margin today | 17.5% |
| Margin compression implied | -9.7pp |
| Implied growth | 8.2% |
| Multiple paid | 25x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.4pp.
Reconcile: at the x-ray's 9.3% required return this reads ~23.4%/yr; the models below use their own rates.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.26σ |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.86x | 5 | expensive |
| Earnings | 3.60x | 4 | expensive |
| Relative | 1.80x | 5 | expensive |
| Growth | 1.32x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $135.11 | 1.65x | yes | FCF base $2.6B, growth 3% (input: historical growth), terminal g 3.0%, WACC 7.9%, 5yr projection |
| DCF Exit Multiple | Growth | $206.52 | 1.08x | yes | Exit EV/EBITDA: 13.9x / 15.9x / 17.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $172.04 | 1.30x | yes | P/E 23.54x (blended: static sector reference 20x + trailing (TTM) 32x), scenarios: 19.8x / 23.5x / 27.3x (bear / base = reference held flat / bull), EV/EBITDA 13x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $75.84 | 2.94x | yes | BV/sh $38.74, ROE (TTM) 18.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $104.77 | 2.13x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $168.42 | 1.32x | yes | Rev $19.1B, growth 3% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.6x / 4.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $83.64 | 2.67x | yes | EPS $6.97, growth 5% (input: historical EPS growth), PEG=5.95 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $52.68 | 4.24x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.84B × (1−20%) / WACC 7.9% → EPV (no growth) |
| Residual Income | Asset | $103.99 | 2.15x | yes | BV $38.74 + 5yr PV of (ROE (TTM) 18.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $77.94 | 2.86x | yes | √(22.5 × EPS $6.97 × BVPS $38.74) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $173.88 | 1.28x | yes | EBITDA $5.17B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | $47.28 | 4.72x | yes | FCF $2594.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $112.08 | 1.99x | yes | EPS $6.97 × (8.5 + 2×5.3%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $12.86 | 17.35x | yes | BV $38.74 × (ROIC 2.6% / WACC 7.9%) |
| P/Sales Sector | Relative | $123.73 | 1.80x | yes | Revenue $19.13B × sector P/S 2.0x |
| PEG Fair Value | Relative | $55.86 | 3.99x | yes | EPS $6.97 × (PEG 1.5 × growth 5.3% (input: historical EPS growth)) → PE 8.0x |
| Earnings Yield | Earnings | $75.35 | 2.96x | yes | EPS $6.97 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $13.9b |
| Net debt / NOPAT (after-tax) | 5.21x |
| Net debt / operating income (pre-tax) | 4.17x |
| Interest coverage | 5.8x |
| Share count CAGR (buyback) | -0.6% |
| Burning cash | no |
Bullet Takeaways
- Republic Services owns the one asset in waste that cannot be replicated, permitted landfill capacity, which is why it raises price above inflation almost every year and earns a 17% operating margin on collection, transfer, and disposal.
- The counterintuitive part: even after weather and diesel hit Q1 2026, adjusted EBITDA margin still expanded 50 basis points to 32.1% on pricing discipline.
- The watch item is pricing versus cost inflation; full-year guidance calls for mid-single-digit revenue growth with 30 to 50 basis points of annual EBITDA margin expansion.
Bull Case
The surprising thing about a garbage company is how much pricing power it has. Republic raised core price 3.4% on total revenue in Q1 2026, with average yield of 4.1%, and pushed adjusted EBITDA margin up 50 basis points to 32.1%, all in a quarter that absorbed roughly $30 million of weather-driven volume loss and an $8 million diesel hit. A business that can expand margin while the weather and fuel work against it is a business whose price increases stick, year after year, almost regardless of the macro.
The reason is the landfill. Permitted disposal capacity is the scarcest asset in the industry, because nobody wants a new landfill built near them, so existing capacity is effectively impossible to replicate. The filing describes the company constantly working to "expand permitted capacity" at its landfills against estimated future waste volumes and prices, the kind of slow, regulated moat a competitor cannot simply buy its way into. Republic owns the destination every collection truck has to drive to, its own and its competitors', and that ownership is what gives the collection business its pricing leverage.
The result is a defensive compounder with utility-like predictability and better growth. Q1 2026 net income grew to $525 million and diluted EPS rose to $1.70 from $1.58, and management guided the full year to mid-single-digit revenue growth with 30 to 50 basis points of annual EBITDA margin expansion. Waste volumes track the economy loosely but never disappear, recurring service contracts renew, and the price increases compound. For an investor who wants growth that does not depend on a cycle turning their way, Republic is about as close as a single stock gets.
Bear Case
Even a defensive business runs on a cycle, and Republic's is the volume of waste the economy generates. When construction slows and consumers spend less, there is simply less to haul, and the company felt a version of that in Q1 2026 when severe weather cut about $30 million from volume performance. Pricing has carried the results through soft volume so far, but pricing power is not infinite: the filing warns directly about the company's "ability to increase prices to our customers, which may not be adequate to offset the impact of increased costs, including labor, third-party disposal and fuel and may cause us to lose volume". Push price too hard in a weak economy and customers leave.
The structural pressure underneath is that Republic's core asset is being designed out of the future. Its own filing notes that customers "voluntarily are diverting waste to alternatives to landfill disposal, such as recycling and composting" and working to generate less waste, and some jurisdictions restrict landfill disposal of certain materials. The landfill is the moat today, but the long arc of regulation and corporate sustainability runs against landfill volume. That does not break the business, but it caps the volume growth the price counts on and forces more of the return onto price increases that have a ceiling.
The valuation leaves little room for either pressure to bite. At about 23 times operating income, no standard valuation family reaches the price: the asset-value methods land well below it, the earnings-power methods further still, and even the forward-growth methods sit under it. The price is paying for the pricing-power durability the static frames cannot credit, which is a defensible read for a quasi-utility but also means there is no value-method floor nearby. Net debt is about $13.9 billion, roughly 4.2 times operating income with interest covered about 5.7 times, manageable for a steady cash generator but heavy enough that a sustained volume downturn colliding with the rich multiple would not be cushioned by the balance sheet. A premium for predictability is only as safe as the predictability.
Valuation
The price assumes something modest in rate but demanding in what it pays for it. At about 23 times operating income, inverting the price implies company-wide operating growth of roughly 6% a year over five years, a pace within what Republic has recently delivered. Against a current operating margin of 17%, that is a within-range assumption on the growth itself; the demand is in the multiple paid to own such a steady, predictable stream.
The methods are unusually unanimous, and the pattern tells the story. No valuation family reaches the price: it is rich on assets, on earnings power, on peer multiples, and even on forward growth. For most companies that pattern would read as overvaluation, but for a regulated, pricing-powered quasi-utility it reads as the market paying a premium for durability the static frames structurally cannot capture. The peer set is the right one, the other large waste operators, and against them Republic's premium reflects the same landfill scarcity and pricing discipline that drove a 50-basis-point margin gain through a weak-volume quarter. The premium is real; the question is how much of it is justified.
Solvency is the constraint that keeps the premium honest. Net debt of about $13.9 billion is roughly 4.2 times operating income with interest covered about 5.7 times, a level a steady-cash business carries comfortably but one that leaves less slack than a lightly levered compounder. The share count is roughly flat, so the per-share return comes from operating growth and the dividend rather than buybacks. What a buyer underwrites at this price is the continuation of above-inflation pricing on an irreplaceable disposal network, paid for at a multiple that no value method independently supports.
Catalysts
Q1 2026 was a steady-as-it-goes quarter with pricing doing the heavy lifting. Sales rose to $4,113 million from $4,009 million a year earlier, net income grew to $525 million from $495 million, and diluted EPS increased to $1.70 from $1.58. Core price on total revenue was 3.4% with average yield of 4.1%, and adjusted EBITDA margin expanded 50 basis points to 32.1% on pricing, cost management, and fuel recovery fees.
The quarter also showed what the business shrugs off. Severe weather reduced volume performance by about $30 million and a sharp March rise in diesel prices cut EBITDA by about $8 million, yet margin still expanded. For the full year, management guided to mid-single-digit revenue growth with 30 to 50 basis points of annual EBITDA margin expansion, the steady cadence the stock is valued on.
What to watch is the spread between price increases and cost inflation, particularly labor, third-party disposal, and fuel, since that spread is the whole margin story. Continued above-inflation pricing with stable volume is the base case; a volume downturn that limits how hard price can be pushed is the risk. The next quarterly yield-and-margin print is the event that confirms or challenges the durability premium in the price.
Peer Cohorts (Per Segment, With Filing Citations)
Group 1 / Group 2 (reported)
- WM (Waste Management, Inc)
- (no filing in the citation store)
- WCN (WASTE CONNECTIONS, INC.)
- (no filing in the citation store)
- CWST (CASELLA WASTE SYSTEMS, INC.)
- (no filing in the citation store)
- CLH (CLEAN HARBORS, INC)
- (no filing in the citation store)
Group 3 (Environmental Solutions) (reported)
- CLH (CLEAN HARBORS, INC)
- (no filing in the citation store)
- WCN (WASTE CONNECTIONS, INC.)
- (no filing in the citation store)
- WM (Waste Management, Inc)
- (no filing in the citation store)
- CWST (CASELLA WASTE SYSTEMS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Republic Services Q1 2026 earnings release, May 2026