Waste management company Republic Services (NYSE: RSG) fell short of the market’s revenue expectations in Q4 CY2025 as sales rose 2.2% year on year to $4.14 billion. The company’s full-year revenue guidance of $17.1 billion at the midpoint came in 1.3% below analysts’ estimates. Its non-GAAP profit of $1.76 per share was 7.9% above analysts’ consensus estimates.

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Company Overview

Processing several million tons of recyclables annually, Republic (NYSE: RSG) provides waste management services for residences, companies, and municipalities.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Republic Services grew its sales at a solid 10.3% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Republic Services’s recent performance shows its demand has slowed as its annualized revenue growth of 5.3% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold. Over the last two years, Republic Services’s units sold were flat. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Republic Services’s revenue grew by 2.2% year on year to $4.14 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.4% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not catalyze better top-line performance yet. At least the company is tracking well in other measures of financial health.

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Operating Margin

Republic Services has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 19%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Republic Services’s operating margin rose by 1.5 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q4, Republic Services generated an operating margin profit margin of 19.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Republic Services’s EPS grew at a remarkable 14.4% compounded annual growth rate over the last five years, higher than its 10.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Republic Services’s earnings to better understand the drivers of its performance. As we mentioned earlier, Republic Services’s operating margin was flat this quarter but expanded by 1.5 percentage points over the last five years. On top of that, its share count shrank by 3.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Republic Services, its two-year annual EPS growth of 11.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Republic Services reported adjusted EPS of $1.76, up from $1.58 in the same quarter last year. This print beat analysts’ estimates by 7.9%. Over the next 12 months, Wall Street expects Republic Services’s full-year EPS of $7.01 to grow 4.1%.

Key Takeaways from Republic Services’s Q4 Results

It was good to see Republic Services beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1.5% to $217.97 immediately after reporting.

Republic Services may have had a tough quarter, but does that actually create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).