Republic Services: Buy Rating Justified by Strong Performance, Growth Potential, and Strategic Acquisitions

Republic Services has consistently delivered robust quarterly results, with its solid waste segment achieving the highest margins among its peers for the second consecutive quarter. Despite near-term challenges in the Environmental Solutions segment, the company's focus on sustainability investments is expected to bolster growth in its core business, justifying a Buy rating. BMO Capital analyst Devin Dodge has reiterated his bullish stance on RSG stock, citing strong performance and growth potential, as well as the company's ability to fund deals and return capital to shareholders.

Republic Services, Inc. (NYSE: RSG) reported robust second-quarter (Q2) 2025 results, highlighting its resilience and commitment to sustainability. The company's net income for the period ended June 30, 2025, was $550 million, or $1.75 per diluted share, representing an 8% increase over the prior year. Adjusted earnings per share (EPS) stood at $1.77 per share, up 9.9% year-over-year [1].

The company's solid waste segment continued to perform strongly, achieving the highest margins among peers for the second consecutive quarter. Total revenue growth of 4.6% included 3.1% organic growth and 1.5% growth from acquisitions. Core price on total revenue increased revenue by 5.7%, while core price on related business revenue increased by 7.0%, with 8.6% growth in the open market and 4.6% in the restricted portion [1].

Despite near-term challenges in the Environmental Solutions segment, Republic Services' focus on sustainability investments is expected to bolster growth in its core business. The company completed and commenced operations on four renewable natural gas projects during the quarter, further underscoring its commitment to sustainability [1].

Jon Vander Ark, president and CEO, commented, "We are pleased with our second quarter results which demonstrate the resilience of our business model and the benefit of the investments in our differentiated capabilities. We produced double-digit growth in EBITDA and 100 basis points of adjusted EBITDA margin expansion by continuing to price ahead of cost inflation and consistently executing our operational plan" [1].

The company's adjusted EBITDA margin expanded by 100 basis points to 32.1% of revenue, while year-to-date cash flow from operations was $2.13 billion, and adjusted free cash flow was $1.42 billion. Republic Services also invested nearly $900 million in value-creating acquisitions during the first half of the year [1].

BMO Capital analyst Devin Dodge reiterated his bullish stance on RSG stock, citing strong performance and growth potential, as well as the company's ability to fund deals and return capital to shareholders. The analyst maintained a Buy rating on the stock [1].

Republic Services continues to increase cash returns to shareholders. The company's Board of Directors approved a 4.5-cent increase in the quarterly dividend, with the new dividend of $0.625 per share to be paid on October 15, 2025 [1].

References:
[1] https://investor.republicservices.com/news-releases/news-release-details/republic-services-inc-reports-second-quarter-2025-results