RSG

We rate REPUBLIC SERVICES, INC. (RSG) as a Hold with a composite score of 59.1/100 at a current price of $220.73. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (97th percentile) and momentum (64th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (40th percentile) and quality (47th percentile) tempers our overall conviction. We assign a Narrow Moat rating (57/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

REPUBLIC SERVICES, INC. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 59.1/100 places it at rank #777 in our full 7,333-stock universe. With a $71.5B market capitalization, REPUBLIC SERVICES, INC. operates at meaningful scale within the Services sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 4% and favorable momentum (64th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 49% (-10.1pp vs sector) narrow to operating margins of 18% (+14.1pp vs sector) and net margins of 11.4%, yielding a gross-to-net conversion rate of 23%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $220.73, REPUBLIC SERVICES, INC. is trading near fair value based on current fundamentals. Our value factor score of 56/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 31.4x (a 32% premium to the sector median of 23.7x), EV/EBITDA of 24.4x (at a premium), P/B of 5.7x, P/S of 3.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to REPUBLIC SERVICES, INC.. The stock presents a balanced risk profile: significant leverage (115% debt-to-equity) and low beta of 0.27 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (115% debt-to-equity); low beta of 0.27 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 97th percentile and quality factor at the 47th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 49% provide a buffer against cost pressures; above-average stability (97th percentile) suggests predictable business dynamics; large-cap scale ($71.5B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate REPUBLIC SERVICES, INC.'s capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — REPUBLIC SERVICES, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, REPUBLIC SERVICES, INC. receives a Hold rating with a composite score of 59.1/100 (rank #777 of 7,333). Our quantitative framework assigns a Narrow Moat (57/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 61/100.

Our analysis supports a neutral stance on REPUBLIC SERVICES, INC.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.