Republic Services is scored 85 for moat and 68 for management. The management score rests on a return on invested capital of 8.8% and a gross margin of 42.0% — figures that describe a business earning a respectable return on what it employs. Debt sits at 1.15x equity. The wide moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 10.3% a year, the rate measured from the filings. The exit multiple assumed is 20.6x. That produces an intrinsic value of $96.16, a 10-CAP price of $133.73 and a payback time price of $170.68, with the value zone set at the highest of the three, $170.68. Today's price of $206.98 sits 21% above it.
The operating figures describe a business performing at a high level; the price asks for that performance to continue and then some. A margin of safety score of 23 is the measure of how little room that leaves for being wrong.
| Price | $206.98 |
| Market cap | $63.7B |
| P/E ratio | 29.3x |
| Return on invested capital | 8.8% |
| Gross margin | 42.0% |
| Debt to equity | 1.15x |
| Free cash flow yield | 3.6% |
| Growth rate used | 10.3% |
| Growth rate measured | 10.0% |
| Exit multiple assumed | 20.6x |
| Company | Moat | Buy price |
| United Rentals (URI) | 77 | $503.03 |
| TransDigm Group (TDG) | 70 | $469.07 |
| W. W. Grainger (GWW) | 73 | $429.51 |
| Honeywell International (HON) | 24 | $138.24 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Republic Services rather than accepting ours.