Republic Services (RSG) Margin Expansion Hits a 14-Year High— But Is Market Pricing in Too Much Optimism?

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Republic Services delivered an above-plan 2024, with adjusted EBITDA of $5.02B (+12% YoY) and EPS of $6.46 (+11% YoY), driven by pricing discipline (6.1% core yield) and margin expansion (+140 bps to 31.1%). Q4 EPS of $1.58 beat by $0.19, but revenue of $4.05B missed by $28.4M as organic volume declined 1.2% due to construction softness and selective contract pruning. 2025 guidance signals 4% revenue growth to $16.85B-$16.95B, with EBITDA of $5.275B-$5.325B (+5% YoY) and margins improving to 31.4%. However, organic volume remains a wildcard (-25 bps to +25 bps expected), and headwinds from lower recycling commodity prices (-$20M EBITDA) and expiring CNG tax credits (-$20M) could weigh on profitability. Sustainability investments remain on track, with the Indianapolis Polymer Center set to contribute in 2H25 and seven new RNG projects adding incremental EBITDA. M&A remains a key pillar, with $1B+ in expected 2025 deal spend, particularly in Environmental Solutions. While RSG's disciplined pricing and cost execution support margin resilience, shares trade above our fair value, with long-term risks from landfill volume swings and M&A integration. Can Republic sustain its record-high margins in a moderating inflation environment, or will pricing normalization and volume pressures challenge the bullish growth narrative?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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