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Reverse DCF · RSG

What RSG's Stock Price Is Really Betting On

The short answer

At today's price, Republic Services's stock is pricing in about 12.4% annual free-cash-flow growth for the next ten years. Over the past five years, the company's actual FCF growth averaged 13.1% a year — but that pace leaned heavily on large acquisitions, so the price also implicitly requires similar M&A activity to continue.

The conclusion

At its current price, RSG implies ~12.4% annual FCF growth for the next 10 years, discounted at 9%.

Republic Services's actual 5-year FCF growth has averaged 13.1% a year.

Verdict: the market expects a continuation of the past five years' pace A required growth rate of 12.4% sits just below the actual five-year FCF CAGR of 13.1%. But that historical pace leaned heavily on large acquisitions (notably the 2022 US Ecology deal) — so this price implicitly assumes similar M&A activity continues, not just organic growth.

Required growth vs. historical growth

Market's ask (WACC 9%)
12.4%
5-yr FCF CAGR (actual)
13.1%
5-yr revenue CAGR (reference)
10.1%

Required growth from the reverse DCF below. Historical CAGRs from 10-K FY2021–FY2025 cash flow statements (FCF = operating cash flow − capex) and income statements.

Sensitivity: what if the discount rate moves?

Required 10-year FCF growth by discount rate (WACC)
WACCRequired growth
7%7.2%
9% (base case, large stable company)12.4%
11%16.7%

At a lower discount rate (7%), the required growth rate falls clearly below the historical pace; at a higher one (11%), it climbs above it. RSG's A- credit rating and large, stable-cash-flow profile support the 9% base case.

What would move this number

  • Using a three-year (2023–2025) average FCF ($2.159B) instead of 2025 alone ($2.409B) raises the required growth rate from 12.4% to 13.8% — because 2025's FCF was 11.6% above that average, a lower starting base requires faster future growth to reach the same target.
  • An 8% discount rate requires 9.9% growth; a 10% rate requires 14.6%.
  • The 13.1% historical FCF CAGR itself leaned on large M&A (notably the 2022 US Ecology acquisition) rather than organic growth alone — whether similar deal activity continues is a key question for whether this pace repeats.

Show your work

Inputs, sources, model assumptions, and the calculation
  • Share price$215.26 — Aug 17, 2026 close
  • Diluted shares outstanding307.6M — 10-Q Q2 FY2026, p.4
  • Market cap$66.214B — price × diluted shares (calculated)
  • Recent FCF (2025)$2.409B — operating cash flow $4.296B minus capex $1.887B, 10-K FY2025, p.67
  • Net debt$13.962B — 10-Q Q2 FY2026, p.2: total debt $14.069B minus cash $0.107B (Jun 30, 2026)
  • Enterprise value (target)$80.176B — market cap + net debt (calculated)
  • Discount rate (WACC)9% base case (7%/11% tested)
  • Terminal growth rate2.5% — long-run GDP-level assumption

Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's enterprise value.

Historical CAGR: 5-year FCF CAGR = ($2,409M / $1,470M)^(1/4) − 1 = 13.14%. 5-year revenue CAGR = ($16,591M / $11,295M)^(1/4) − 1 = 10.09%. A full 10-year CAGR wasn't calculable due to lack of pre-2016 data.

The fine print

This number is a starting point, not an answer
  • Change the discount rate, the FCF base, the projection window, or the terminal growth rate, and the answer moves — see the sensitivity table above.
  • A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
  • The 13.1% historical growth pace this price references leaned heavily on M&A — whether similar acquisition activity continues at a similar pace is a separate question from organic execution.
  • Any investment decision, and its outcome, is your own responsibility.
Built from Republic Services's 10-K filings (FY2021–FY2025) and 10-Q (Q2 FY2026). This tells you where to dig deeper — it is not a buy or sell signal.

Frequently asked questions

What growth rate does RSG's stock price assume?

At today's price, Republic Services's stock is pricing in about 12.4% annual free-cash-flow growth for the next ten years.

How does that compare to Republic Services's actual growth?

Over the past five years, Republic Services's actual free-cash-flow growth averaged 13.1% a year — slightly above the ~12.4% required — but that pace leaned heavily on large acquisitions, so the price implicitly requires similar M&A activity to continue.

What share price was used for this analysis?

This analysis used $215.26, as of Aug 17, 2026.