Republic Services (RSG): Time to Consider Puts?

Republic Services is a major environmental services provider in the U.S. and Canada. Its core business encompasses collection, transfer, recycling, and disposal of 'recyclable', 'solid waste', and 'industrial waste' materials. The company also provides 'environmental solutions', including treatment of 'hazardous' and 'non-hazardous waste', 'field and industrial services', and 'sustainability innovation' services. Republic serves a diverse range of customers, from residential and commercial entities to industrial, petrochemical, and oil and natural gas facilities. The company's business strategy focuses on developing vertically integrated market positions, expanding recycling capabilities through initiatives like 'Polymer Centers' and 'Blue Polymers', and leveraging digital and sustainability capabilities. A key element is the 'Republic Way: One Way. Everywhere. Every Day' operating model, which emphasizes standardized business practices and local operating management.

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RSG's technical outlook is decidedly bearish. The stock price has experienced a significant decline over the past 90 days, starting from approximately $246.61 on June 30, 2025, and falling to $207.69 as of November 4, 2025. The price is trading well below its 50-day SMA of $225.10 and 200-day SMA of $234.95, confirming the downtrend. Momentum indicators reinforce this bearish sentiment. The MACD at -4.48 is significantly below its signal line, and the RSI of 23.01 indicates oversold conditions, although it may also suggest potential for a short-term bounce. The ADX is elevated at 27.09, suggesting a strong trend is in place. The stochastic oscillator shows the stock is oversold, but this may not be enough to counter the prevailing bearish momentum. Bollinger Bands also indicate recent prices are nearing the lower band, further suggesting oversold conditions and potential for continued downward pressure or consolidation at best. Overall, the technical indicators point to a high probability of continued weakness in RSG over the next 1-3 months.

Republic Services' MD&A presents a slightly positive but nuanced picture. For the three months ended September 30, 2025, total revenue increased to $4,212 million from $4,076 million in 2024. For the nine months ended September 30, 2025 revenue increased by 3.9% to $12,456 million compared to $11,986 million for the same period in 2024. The increase was primarily driven by average yield increases of 4.0% and 4.2% for the three and nine months ended September 30, 2025, respectively. Volume decreases of 0.3% and 0.4% for the three and nine months ended September 30, 2025, respectively, had a negative impact on revenue. Net income attributable to Republic Services, Inc. was $550 million, or $1.76 per diluted share, for the three months ended September 30, 2025, compared to $566 million, or $1.80 per diluted share, for the same period in 2024. Cash flow from operating activities increased to $3,315 million for the nine months ended September 30, 2025, compared to $2,914 million for the same period in 2024. The company expects to invest at least '$1.1 billion in acquisitions in 2025'. The company's total debt to EBITDA ratio was approximately 2.5 as of September 30, 2025, compared to the 3.75 maximum allowed under their credit facility. While the company is compliant with debt covenants, management acknowledges that failure to comply with these covenants would adversely affect their liquidity.

Republic Services' Q2 2025 earnings call projects a moderately bullish outlook. While the company updated its full-year revenue guidance to a range of '$16.675 billion to $16.75 billion,' this was offset by maintaining original guidance for adjusted EBITDA ('$5.275 billion to $5.325 billion') and adjusted earnings per share ('$6.82 to $6.90'). Adjusted free cash flow guidance was increased to '$2.375 billion to $2.415 billion.' The company achieved revenue growth of 4.6% and adjusted EBITDA growth of 8%, with adjusted EBITDA margin expanding by 100 basis points. CEO Jon Vander Ark stated, 'We are pleased with our second quarter results, which reflect the resilience of our business model and consistent operational execution.' Despite softness in construction and manufacturing end markets impacting collection volumes and Environmental Solutions revenue, strong pricing (average yield on related revenue of 5%) drove margin expansion. The company is also making progress on sustainability initiatives, including Polymer Centers and renewable natural gas projects, and remains active in strategic acquisitions, expecting to invest over $1 billion in 2025. While labor disruptions are being addressed, the overall tone suggests confidence in the company's ability to navigate challenges and deliver value.

RSG's financial performance exhibits a generally positive trend. Revenue has increased from $3.86B in Q1 2024 to $4.21B in Q3 2025. The gross profit ratio, while fluctuating, has remained relatively stable in the 0.29-0.31 range. Operating cash flow has been consistently positive, with the latest quarter showing $1.181B. Total debt has fluctuated, starting at $13.07B in Q1 2024, decreasing to $12.80B in Q3 2024, then increasing to $13.53B in Q1 2025 before decreasing to $921M in Q3 2025, primarily due to a shift from long-term to short-term debt. Net income has also remained relatively stable, with the latest quarter reporting $550M. Overall, RSG demonstrates solid revenue growth and cash generation, along with consistent profitability, although the debt structure fluctuations warrant monitoring.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.