REPUBLIC SERVICES, INC. (RSG) stock intrinsic value fair value estimate & owner earnings analysis

Republic Services is one of the largest providers of waste and environmental services in the United States: collection, transfer, recycling and landfill disposal of municipal and commercial solid waste, plus a newer Environmental Solutions business (hazardous and industrial waste handling) added when the company acquired US Ecology in May 2022. An earlier acquisition, Advanced Disposal, closed in October 2020 and materially scaled the core collection and disposal business. We build value from owner earnings: operating cash flow, adjusted to remove short-term working-capital swings and stock-based compensation, less the capital spending needed just to maintain today's business (as opposed to capital spent to grow it). One judgment call worth stating plainly: Republic's cash flow statement includes cash spent on capping, closing and monitoring old landfills, and on environmental remediation. We treated this spending as a real, recurring cost of the business - left inside owner earnings - rather than as a timing swing to be added back, since it is the actual cash cost of an obligation the company takes on every time it operates a landfill. On the same logic, capital spending to develop new landfill cells (airspace) is split between maintenance and growth using the same method applied to all capital spending: spending in proportion to revenue growth is treated as growth, the remainder as the cost of maintaining the current business. Our anchor for current, normalized owner earnings is about $7.60 per share, the median of fiscal 2023-2025 - the three years since the Environmental Solutions acquisition was fully in the base, so the figure reflects the business as it exists today rather than its smaller pre-acquisition self. Owner earnings per share actually grew about 12% in 2025 and 16% in 2024; because that pace was helped by integrating a large acquisition, our base case assumes 8% growth in the first year, gradually slowing toward roughly 5% by year ten as that boost fades and the business reverts to its more normal blend of price increases, modest volume growth and disciplined bolt-on acquisitions. Our base case is worth about $234 per share today. Roughly two-thirds of that value comes from what we expect the business to earn after year ten, which deserves its own explanation: essential waste collection and disposal has real pricing power and high barriers to new landfill permitting, and Republic has a long record of expanding disposal capacity at existing sites and adding new ones - so we think a modest, low-single-digit perpetual value is reasonable rather than assuming the business fades away. But any individual landfill still has finite permitted capacity, so we kept this assumption deliberately modest (about 1% annual growth beyond year ten) rather than extrapolating recent growth indefinitely. Our bear case, worth about $142 per share, assumes a multi-year stretch where recycled-commodity prices (roughly 5% of revenue) stay weak, the newer industrial and hazardous-waste business grows more slowly and disappoints on a project or two, and customers push back harder on price increases in a softer economy - owner earnings actually shrinks slightly in year one before a slow recovery. Our bull case, worth about $334 per share, assumes the Environmental Solutions business continues to outgrow the core, driven partly by durable demand for hazardous-waste and contamination remediation work, along with continued monetization of landfill gas as renewable energy, sustained above-inflation pricing, and continued disciplined bolt-on acquisitions. Putting those together, the margin-of-safety price is around $175, which reflects a meaningful but not maximal discount given this is a predictable, essential-service business rather than a speculative one. One item we could not fully reconcile from the 2025 filing: stock-based compensation is no longer broken out as its own line in the cash flow statement (it appears folded into a broader "other non-cash items" line), so we estimated it at roughly $47 million from the stock compensation roll-forward elsewhere in the filing. It is a small enough number, well under 2% of operating cash flow, that the estimate does not meaningfully affect the value.