Here's Why You Should Hold on to Republic Services Stock for Now
Republic Services RSG stock has gained 7.1% over the past three months, outpacing the modest performance of the industry and the Zacks S&P 500 Composite.
3-Month Share Price Performance
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The Zacks Consensus Estimate for RSG’s 2026 revenues is set at $17.3 billion, implying a nearly 4% year-over-year growth. For EPS, the consensus mark for 2026 is pegged at $7.27, indicating a 3.6% year-over-year uptick.
For 2027, the consensus mark for revenues is pinned at $18.2 billion, up 5.4% year over year. EPS is expected to increase 10.1% year over year.
Factors That Augur Well for RSG’s Success
Strong Pricing & Margins: Republic Services is logging prudent pricing, supporting healthy price-cost spreads despite shouldering volume pressure. During the second quarter of 2026, core price on related revenues gained 6.4% year over year, including 7.8% growth in open-market pricing, while average yield on total revenues was 3.4%. The underlying business delivered 90 basis points (bps) year-over-year margin expansion, driven by pricing outpacing cost inflation. Management anticipates 60-70 bps margin expansion for 2026.
Environmental Solutions Present Growth Opportunities: During the second quarter of 2026, RSG’s Environmental Solutions business gained $53 million sequentially, with adjusted EBITDA margin expanding 100 bps sequentially. Management anticipates revenues and margin to grow during the second half of 2026. The company identified the per- and polyfluoroalkyl substances business as an opportunity where it expects its revenue to exceed more than $100 million generated in 2025. The driving factors include a growing pipeline across hazardous waste, water treatment and robust waste capabilities.
Cash-Backed Growth & Shareholder Returns: The company generated $2.4 billion of operating cash flow and $1.6 billion of adjusted free cash flow during the first half of 2026. Over the same period, RSG utilized $860 million in acquisitions and returned more than a billion to its shareholders through repurchases and dividends.
The quarterly dividend was also increased to 67 cents per share. With full-year adjusted free cash flow guidance raised to $2.54-$2.575 billion from the prior view of $2.52-$2.56 billion, the company has the internal funding capacity to pursue buyouts, invest in operations and maintain shareholder distributions.
Risks Faced by Republic Services
Volume Pressure Remains: The company faces pressure on organic volumes consistently. During the second quarter of 2026, volumes related to revenues edged down by 1.9% year over year and total revenues by 1.6%. RSG witnessed a 2.2% year-over-year dip in large container volumes amid persistent softness in construction activity, while residential volumes declined 4.3% due to contract losses. Despite management’s optimism surrounding sequential improvement, residential volumes are anticipated to remain negative through 2027.
Fuel & Commodity Price Risk: Republic Services’ profitability can be affected by fluctuations in fuel and commodity prices. During the second quarter of 2026, net fuel deteriorated adjusted EBITDA margin by 30 bps, accompanied by recycled commodity prices creating a 10 bps drag. While higher costs are offset by the fuel recovery mechanism, there exists a timing lag between an increase in fuel expenses and recovery from customers, which can create near-term earnings and margin pressure.
RSG’s Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Figure Technology Solutions FIGR and Gartner IT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Figure Technology has a long-term earnings growth expectation of 56.9%. FIGR delivered a trailing four-quarter earnings surprise of 28.2%, on average.
Gartner has a long-term earnings growth expectation of 18.5%. IT delivered a trailing four-quarter earnings surprise of 13.5%, on average.
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This article originally published on Zacks Investment Research (zacks.com).
