Republic Services, Inc. (NYSE: RSG)

Sector: Industrials Industry: Waste Management CIK: 0001060391
Market Cap 75.14 Bn
P/B 9.81
P/E 112.85
P/S 7.74
ROIC (Qtr) 11.31
Div Yield % 0.86
Rev 1y % (Qtr) 3.34
Total Debt (Qtr) 13.27 Bn
Debt/Equity (Qtr) 1.12
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About

Republic Services, Inc. (RSG) is a prominent company in the environmental services industry, providing waste management, recycling, and environmental solutions across the United States. With a vast network of 364 collection operations, 246 transfer stations, 74 recycling centers, 207 active landfills, and 3 treatment, recovery, and disposal facilities, Republic Services is well-positioned to serve a diverse range of customers. The company's primary business activities revolve around waste collection, recycling, and disposal, as well as environmental...

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Investment thesis

Bull case

  • Operating cash flow of 4.34B provides exceptional 8674x coverage of minority interest expenses 500000, showing strong core operations.
  • Operating cash flow of 4.34B provides strong 98.57x coverage of stock compensation 44M, indicating sustainable incentive practices.
  • Tangible assets of 16.49B provide exceptional 32.72x coverage of deferred revenue 504M, showing strong service capability backing.
  • Strong operating cash flow of 4.34B provides 2.52x coverage of SG&A expenses 1.72B, showing efficient operational cost management.
  • Operating cash flow of 4.34B provides strong 8.61x coverage of deferred revenue 504M, indicating service delivery capability.

Bear case

  • Operating cash flow of 4.34B barely covers its investment activities of (3.38B), with a coverage ratio of -1.28, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 4.34B provides thin coverage of dividend payments of (726.20M) with a -5.97 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 84M provide limited coverage of acquisition spending of (1.61B), which is -0.05x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 3.12B show weak coverage of depreciation charges of 1.91B, with a 1.63 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 1.91B relative to operating cash flow of 4.34B, which is 0.44x suggests significant maintenance capital requirements affecting free cash flow.

Product and Service Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Waste Management
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WM Waste Management Inc 94.79 Bn 35.00 3.76 22.91 Bn
2 RSG Republic Services, Inc. 75.14 Bn 112.85 7.74 13.27 Bn
3 WCN Waste Connections, Inc. 41.54 Bn 38.58 4.39 9.15 Bn
4 GFL GFL Environmental Inc. 16.21 Bn 5.79 3.36 5.79 Bn
5 CLH Clean Harbors Inc 14.43 Bn 37.17 2.42 3.02 Bn
6 CWST Casella Waste Systems Inc 6.60 Bn 432.83 3.68 1.23 Bn
7 NVRI ENVIRI Corp 1.52 Bn -9.13 0.68 1.67 Bn
8 MEG Montrose Environmental Group, Inc. 0.71 Bn -25.50 0.86 0.37 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.45 1.64
EV to Cash from Ops. EV/CFO 43.97 3.23
EV to Debt EV to Debt 6.24 85.65
EV to EBIT EV/EBIT 58.47 8.07
EV to EBITDA EV/EBITDA 30.55 -3.42
EV to Free Cash Flow [EV/FCF] EV/FCF 84.74 8.12
EV to Market Cap EV to Market Cap 1.10 1.86
EV to Revenue EV/Rev 8.53 5.60
Price to Book Value [P/B] P/B 9.81 3.45
Price to Earnings [P/E] P/E 112.85 30.95
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.90 4.33
Dividend Payout Ratio % Div Payout % (Qtr) 34.40 5.62
Dividend per Basic Share Div per Share (Qtr) 2.37 0.35
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 28.60 5.29
Interest Coverage Int. cover (Qtr) 5.57 5.13
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 7.01 14.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.72 -1.80
Dividend Growth (1y) % Div 1y % (Qtr) 8.24 -2.49
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 6.42 243.78
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 7.73 341.01
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.08 188.84
EBT Growth (1y) % EBT 1y % (Qtr) 7.53 158.00
EPS Growth (1y) % EPS 1y % (Qtr) 7.84 92.91
FCF Growth (1y) % FCF 1y % (Qtr) 34.20 3.93
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.73 16.16
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.49 0.60
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.02
Cash Ratio Cash Ratio (Qtr) 0.02 0.89
Current Ratio Curr Ratio (Qtr) 0.58 1.93
Debt to Equity Ratio Debt/Equity (Qtr) 1.12 0.73
Interest Cover Ratio Int Coverage (Qtr) 5.57 5.13
Times Interest Earned Times Interest Earned (Qtr) 5.57 5.13
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 30.50 -22.04
EBIT Margin % EBIT Margin % (Qtr) 18.93 -33.04
EBT Margin % EBT Margin % (Qtr) 15.53 -37.82
Gross Margin % Gross Margin % (Qtr) 42.20 23.79
Net Profit Margin % Net Margin % (Qtr) 12.80 -39.04