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.
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.
Required growth vs. historical growth
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?
| WACC | Required 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
- 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.
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.