Republic Services (RSG) AI Stock Analysis

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Republic Services

(NYSE:RSG)

75Outperform

Republic Services scores well with strong financial performance and a positive earnings call reflecting growth and strategic initiatives. However, caution is advised due to the stock's high valuation and overbought technical indicators.

Positive Factors

Financial Performance

Impressive OpEx control and Environmental Solutions margins drove the strong EBITDA performance.

Mergers and Acquisitions

There is an expectation to invest $1 billion in M&A in 2025, with only assumed acquisitions closed, suggesting further growth opportunities.

Sustainability Investments

Given its ongoing investments in EVs and recycling processing capabilities, RSG will increasingly be the preferred name among sustainability-focused investors.

Negative Factors

Pricing and Volume

Decelerating pricing and soft construction and industrial volumes are to blame for slowing growth.

Revenue Estimates

Republic revised 2024 EBITDA to the high end of the prior range while revenue was revised near the low end of the range.

Revenue Growth

Revenue growth is trending lower but costs are moderating too.

Republic Services (RSG) vs. S&P 500 (SPY)

Market Cap

$76.02B

Dividend Yield0.92%

Average Volume (3M)1.46M

Price to Earnings (P/E)37.5

Beta (1Y)0.44

Revenue Growth7.13%

EPS Growth18.68%

CountryUS

Employees42,000

SectorIndustrials

Sector Strength66

IndustryWaste Management

Share Statistics

EPS (TTM)6.49

Shares Outstanding312,468,660

10 Day Avg. Volume1,800,777

30 Day Avg. Volume1,455,574

Financial Highlights & Ratios

PEG Ratio2.01

Price to Book (P/B)N/A

Price to Sales (P/S)4.55

Price to Cash Flow (P/CF)17.80

P/FCF Ratio28.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$249.58

Price Target Upside2.59% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering19

Republic Services Business Overview & Revenue Model

Company DescriptionRepublic Services, Inc., together with its subsidiaries, offers environmental services in the United States. The company offers collection and processing of recyclable materials, collection, transfer and disposal of non-hazardous solid waste, and other environmental solutions. Its collection services include curbside collection of material for transport to transfer stations, landfills, or recycling processing centers; supply of recycling and waste containers; and renting of compactors. In addition, the company engages in the processing and sale of old corrugated containers, old newsprint, aluminum, glass, and other materials; and provision of landfill and transfer services. Further, it offers disposal of non-hazardous solid and liquid material and in-plant services, such as transportation and logistics. It serves small-container, large-container, and residential customers. As of December 31, 2021, the company operated through 356 collection operations, 239 transfer stations, 198 active landfills, 71 recycling processing centers, 6 saltwater disposal wells, and 7 deep injection wells, as well as 3 treatment, recovery, and disposal facilities in 41 states. It also operated 77 landfill gas-to-energy and renewable energy projects and had 124 closed landfills. The company was incorporated in 1996 and is based in Phoenix, Arizona.

How the Company Makes MoneyRepublic Services generates revenue through several key streams, primarily centered around its waste collection and disposal services. The company earns money by charging fees for collecting waste from residential, commercial, and industrial clients. Additionally, Republic Services operates transfer stations and recycling facilities, where it processes and sells recyclable materials. Another significant revenue stream is landfill operations, where the company charges tipping fees for waste disposal. Republic Services also engages in strategic partnerships with municipalities and other organizations to manage waste services, further contributing to its earnings.

Republic Services Financial Statement Overview

Summary

Republic Services demonstrates strong financial performance with robust revenue growth, improved profitability, efficient leverage management, and solid cash flow generation. The company is well-positioned with strategic investments for future growth.

Income Statement

Very Positive

Republic Services has demonstrated a robust financial performance with consistent revenue growth, increasing from $10.15 billion in 2020 to $16.03 billion in 2024. The gross profit margin remains strong, with marked improvements in EBIT and EBITDA margins, showcasing operational efficiency. Net profit margins have also improved, indicating enhanced profitability. The revenue growth rate is commendable, reflecting an upward trajectory.

Balance Sheet

Positive

The company's balance sheet shows a healthy equity base, with stockholders' equity rising steadily. The debt-to-equity ratio has decreased over time, indicating improved leverage management. However, the equity ratio remains relatively stable, suggesting a balanced asset financing structure. The return on equity has improved, highlighting effective use of equity to generate earnings.

Cash Flow

Positive

Cash flow statements reveal a strong free cash flow position, with positive free cash flow growth. Operating cash flow has increased, supporting the company's ability to sustain operations and fund dividends. The operating cash flow to net income ratio remains favorable, indicating efficient cash generation relative to net income. However, capital expenditures have been significant, reflecting ongoing investment in business growth.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
16.03B	14.96B	13.51B	11.29B	10.15B
	Gross Profit
6.68B	6.02B	5.31B	4.56B	4.05B
	EBIT
3.20B	2.78B	2.39B	2.08B	1.71B
	EBITDA
4.75B	4.32B	3.66B	3.38B	3.00B
	Net Income Common Stockholders
2.04B	1.73B	1.49B	1.29B	967.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
282.00M	140.00M	143.40M	29.00M	38.20M
	Total Assets
32.40B	31.41B	29.05B	24.95B	23.43B
	Total Debt
862.00M	13.07B	11.78B	9.55B	8.93B
	Net Debt
788.00M	12.93B	11.64B	9.53B	8.90B
	Total Liabilities
21.00B	20.87B	19.36B	15.98B	14.95B
	Stockholders Equity
11.40B	10.54B	9.69B	8.98B	8.48B
Cash Flow		Free Cash Flow
2.08B	1.99B	1.74B	1.47B	1.28B
	Operating Cash Flow
3.94B	3.62B	3.19B	2.79B	2.47B
	Investing Cash Flow
-2.56B	-3.67B	-4.42B	-2.47B	-1.92B
	Financing Cash Flow
-1.40B	61.90M	1.34B	-329.20M	-612.00M

Republic Services Technical Analysis

Technical Analysis Sentiment

Positive

Last Price243.28

Price Trends

50DMA

234.07

Positive

100DMA

221.98

Positive

200DMA

211.58

Positive

Market Momentum

MACD

2.91

Negative

RSI

57.17

Neutral

STOCH

80.82

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RSG, the sentiment is Positive. The current price of 243.28 is above the 20-day moving average (MA) of 239.61, above the 50-day MA of 234.07, and above the 200-day MA of 211.58, indicating a bullish trend. The MACD of 2.91 indicates Negative momentum. The RSI at 57.17 is Neutral, neither overbought nor oversold. The STOCH value of 80.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RSG.

Republic Services Risk Analysis

Republic Services disclosed 33 risk factors in its most recent earnings report. Republic Services reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Republic Services Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WM	80 Outperform	$92.90B	33.92	36.24%	1.33%	8.01%	20.17%
RSG	75 Outperform	$76.02B	37.48	18.61%	0.92%	7.13%	18.68%
CLH	73 Outperform	$11.22B	27.89	16.69%	―	8.89%	6.76%
CWST	64 Neutral	$7.50B	527.65	1.05%	―	23.15%	-50.55%
Sector *	62 Neutral	$4.17B	11.26	5.46%	215.76%	4.12%	-8.54%

* Industrials Sector Average

Performance Comparison

RSG

Republic Services

243.28

53.61

28.26%

CWST

Casella Waste

118.30

24.21

25.73%

CLH

Clean Harbors

206.94

11.49

5.88%

Waste Management

230.91

26.34

12.88%

Republic Services Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: 8.63% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong financial and operational performance for Republic Services in 2024, with notable achievements in revenue growth, customer retention, and sustainability initiatives. However, challenges remain with respect to volume declines in certain segments and potential headwinds from commodity prices.

Highlights

Strong Financial Performance

Republic Services achieved revenue growth of 7%, adjusted EBITDA growth of 12%, and expanded adjusted EBITDA margin by 140 basis points in 2024. Adjusted earnings per share stood at $6.46 with $2.18 billion of adjusted free cash flow.

Customer Retention and Satisfaction

The company maintained a strong customer retention rate of more than 94% and saw favorable trends in net promoter scores due to high-quality service delivery.

Technological Advancements

The implementation of EMPower, a new fleet and equipment management system, is expected to deliver $20 million in annual cost savings. Digital platforms like RISE have already generated $60 million in incremental revenue.

Sustainability Initiatives

The company’s investments in plastic circularity and renewable natural gas are progressing well, with several projects coming online and contributing to long-term value creation.

Successful Capital Allocation

In 2024, Republic Services invested $358 million in strategic acquisitions and returned $1.18 billion to shareholders, including $490 million through share repurchases.

Lowlights

Volume Decline in Certain Segments

Organic volume on total revenue declined 1.2% in Q4 2024, with softness in construction and manufacturing end markets, and shedding of underperforming residential contracts.

Commodity Price Headwinds

Recycling commodity prices are expected to pose a headwind, with current prices at $145 per ton compared to $164 for the full year 2024.

Environmental Solutions Margin Challenges

While margins improved significantly in the Environmental Solutions segment, the pace of future margin expansion is expected to slow down.

Company Guidance

In the Republic Services fourth quarter and full-year 2024 investor conference call, the company exceeded its financial guidance by achieving a 7% revenue growth, a 12% increase in adjusted EBITDA, and expanding the adjusted EBITDA margin by 140 basis points. They delivered an adjusted earnings per share (EPS) of $6.46 and generated $2.18 billion in adjusted free cash flow. For 2025, Republic Services projects revenue between $16.85 billion and $16.95 billion, adjusted EBITDA in the range of $5.275 billion to $5.325 billion, and adjusted EPS between $6.82 and $6.90. The company also anticipates adjusted free cash flow between $2.32 billion and $2.36 billion, and plans to invest at least $1 billion in acquisitions. Key metrics included a strong customer retention rate over 94%, while the fourth-quarter organic revenue growth was bolstered by a 4.4% average yield on total revenue and a 5.3% average yield on related revenue, despite a 1.2% decline in organic volume. The company continues to advance its sustainability initiatives with investments in polymer centers and renewable natural gas projects, while also making strides in fleet electrification.

Republic Services Corporate Events

Business Operations and StrategyFinancial Disclosures

Republic Services Reports Strong 2024 Financial Results

Positive

Feb 13, 2025

On February 13, 2025, Republic Services reported its financial results for the fourth quarter and full year of 2024, showing a notable performance with a net income of $512 million for Q4 and $2.04 billion for the full year. The company exceeded its 2024 guidance on adjusted EBITDA, earnings per share, and free cash flow, and returned $1.18 billion to shareholders. For 2025, Republic Services projects revenue between $16.85 billion and $16.95 billion and plans to invest approximately $1 billion in acquisitions, indicating a strong outlook supported by favorable pricing, acquisitions, and sustainability investments.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.