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Republic Services, Inc. (RSG) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Republic Services, Inc. (RSG)

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Intrinsic Value (DCF)

Current$210.79
→
Intrinsic$126.40
-40%
$71.24$126.40$236.14
Market implies 25% growth for 5 years
Current price reflects execution expectations above 14% growth — not unreasonable for quality businesses.
At $211, the market prices in continued strong cash flow growth (25%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $71 → Bull $236. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →10%12%14%16%
8%$167$185$204$225
10%$101$113$126$140
12%$67$76$85$95
14%$46$53$60$68

Bull Case

  • Bull case ($236) offers 12% upside at 17% growth, 8% discount
  • Conservative 14% growth assumption is achievable based on track record

Bear Case

  • Bear case ($71) implies 66% downside at 11% growth, 12% discount
  • Price reflects 25% growth expectations vs 14% historical — high bar to clear
  • Trading 40% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$2.38B
Year 2$2.72B
Year 3$3.11B
Year 4$3.55B
Year 5$4.06B
Terminal$64.27B

📐 Model Inputs

Growth Rate14.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$2.08BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is RSG stock undervalued or overvalued?
🔴 OVERVALUED

RSG trades at $210.79 vs. our DCF-derived intrinsic value of $126.40, implying -40% downside. Using a 9.5% WACC and 14.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($205.87) suggests limited upside.

What is RSG's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.08B, projected at 14.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $12.88B net debt and dividing by 0.31B shares: Bear $71.88 | Base $126.40 | Bull $205.87. Current price $210.79 implies -40% to base case.

How is RSG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($52.67B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 25.3x.