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Mcgrath Rentcorp (MGRC)
NASDAQ:MGRC
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Mcgrath Rentcorp
(NASDAQ:MGRC)
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Rating:58Neutral
Price Target:
$107.00
▼(-1.77% Downside)
The overall stock score reflects significant challenges in technical analysis and financial performance. While there are positive aspects such as operational efficiency and a reasonable valuation, bearish technical indicators and mixed earnings call results weigh heavily on the score.
Positive Factors
Operational Efficiency
A high gross profit margin indicates efficient cost management, allowing the company to maintain profitability even in challenging market conditions.
Market Stabilization
Diversification into energy and data centers suggests potential stabilization and growth, reducing reliance on the construction sector and enhancing resilience.
Education Sector Growth
Significant funding in the education sector provides growth opportunities for McGrath's modular space solutions, supporting long-term revenue expansion.
Negative Factors
Revenue Decline
A decline in total and sales revenues indicates potential challenges in demand, which could impact future growth and profitability.
Cash Flow Concerns
Significant decline in free cash flow limits the company's ability to invest in growth opportunities and manage debt, affecting long-term financial health.
Profitability Decline
A declining net profit margin suggests reduced profitability, which could hinder the company's ability to reinvest in its business and reward shareholders.
Mcgrath Rentcorp (MGRC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.68B
Dividend Yield1.79%
Average Volume (3M)125.21K
Price to Earnings (P/E)18.3
Beta (1Y)0.79
Revenue Growth4.77%
EPS Growth-35.44%
CountryUS
Employees1,219
SectorIndustrials
Sector Strength72
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)1.72
Shares Outstanding24,611,656
10 Day Avg. Volume147,190
30 Day Avg. Volume125,211
Financial Highlights & Ratios
PEG Ratio0.37
Price to Book (P/B)2.44
Price to Sales (P/S)3.01
P/FCF Ratio8.21
Enterprise Value/Market Cap1.28
Enterprise Value/Revenue3.69
Enterprise Value/Gross Profit7.79
Enterprise Value/Ebitda10.20
Forecast
1Y Price Target
$143.00Price Target Upside31.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Mcgrath Rentcorp Business Overview & Revenue Model
Company DescriptionMcGrath RentCorp operates as a business to business rental company in the United States and internationally. It rents and sells relocatable modular buildings, portable storage containers, electronic test equipment and related accessories, and liquid and solid containment tanks and boxes. The company operates through four segments: Mobile Modular, TRS-RenTelco, Adler Tanks, and Enviroplex. The Mobile Modular segment rents and sells modular buildings designed for use as classrooms, temporary offices adjacent to existing facilities, sales offices, construction field offices, restroom buildings, health care clinics, child care facilities, office spaces, and various other purposes; and portable storage containers. The TRS-RenTelco segment rents and sells general purpose electronic test equipment, such as oscilloscopes, amplifiers, analyzers, signal source, and power source test equipment primarily to aerospace, defense, electronics, industrial, research, and semiconductor industries. It also provides communications test equipment, including network and transmission test equipment for various fiber, copper, and wireless networks to the manufacturers of communications equipment and products, electrical and communications installation contractors, field technicians, and service providers. The Adler Tanks segment rents fixed axle steel tanks for storing groundwater, wastewater, volatile organic liquids, sewage, slurry and bio sludge, oil and water mixtures, and chemicals; vacuum containers for sludge and solid materials; dewatering boxes for the separation of water contained in sludge and slurry; and roll-off and trash boxes for temporary storage and transportation of solid waste. The Enviroplex segment manufactures and sells portable classrooms directly to public school districts and other educational institutions in California. The company was incorporated in 1979 and is headquartered in Livermore, California.
How the Company Makes MoneyMcGrath RentCorp generates revenue primarily through the rental of modular buildings and portable storage containers. The company's revenue model is based on long-term and short-term rental agreements, with customers paying monthly fees for the use of their products. Key revenue streams include rental income from modular space units, storage containers, and related services such as transportation and installation. Additionally, the company benefits from the sale of products and services related to its offerings. Significant partnerships with contractors, government agencies, and various industries enhance its market presence and contribute to its earnings by providing a steady demand for its rental services.
Mcgrath Rentcorp Earnings Call Summary
Earnings Call Date:Oct 23, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong growth in TRS-RenTelco and positive signs of market stabilization. However, these were offset by decreases in total revenue and adjusted EBITDA, as well as lower utilization rates in Mobile Modular. The upward revision of the financial outlook and strong education sector funding provide a positive outlook, but current challenges remain significant.Q3-2025 Updates
Positive Updates
TRS-RenTelco Rental Revenue Growth
TRS-RenTelco rental revenue grew by a strong 9%, with both general purpose and communications rental revenues seeing strong growth. Utilization improved year-over-year to a healthy 65%.
Encouraging Market Stabilization
Opportunities in energy, data centers, and seasonal retail offset the flat construction market, suggesting potential market stabilization after a challenging demand contraction in 2024.
Upward Revision of Financial Outlook
The company has upwardly revised its full-year financial outlook, expecting total revenue between $935 million and $955 million, adjusted EBITDA between $350 million and $357 million.
Strong Education Sector Funding
California passed a $10 billion facility bond and Texas passed an $8 billion bond, indicating solid funding for the education sector and potential future growth in this area.
Negative Updates
Total Revenue Decrease
Total revenues decreased by 4% to $256 million, with sales revenues decreasing by 18% during the quarter.
Adjusted EBITDA Decline
Adjusted EBITDA decreased 7% to $96.5 million. Net income for the third quarter decreased by $3.6 million or 8% to $42.3 million, and diluted earnings per share decreased by $0.15 to $1.72.
Mobile Modular Utilization Drop
Mobile Modular saw a lower average fleet utilization of 72.6% compared to 77.1% a year earlier. This was due to softer market demand.
Company Guidance
During the McGrath RentCorp Third Quarter 2025 Earnings Call, the company provided guidance emphasizing a 4% increase in total company rental operations revenues, with specific growth in their Mobile Modular and TRS-RenTelco segments. Mobile Modular saw a 2% rise in rental revenues, primarily due to infrastructure projects, despite a 5% decrease in total revenue to $181.5 million. TRS-RenTelco experienced a 9% increase in rental revenue driven by growing demand across markets, with strong utilization at 65%. Portable Storage revenues grew modestly by 1% year-over-year, with shipments increasing and stable pricing. The company reported an adjusted EBITDA decrease of 7% to $96.5 million and a net income decline of 8% to $42.3 million. Despite these challenges, McGrath revised its full-year revenue outlook upward to between $935 million and $955 million, with adjusted EBITDA projected between $350 million and $357 million, highlighting an optimistic stance on market stabilization and strategic growth initiatives.Mcgrath Rentcorp Financial Statement Overview
Summary
McGrath Rentcorp demonstrates operational efficiency with strong EBIT and EBITDA margins, but faces challenges in revenue growth and cash flow generation. The balance sheet is stable with moderate leverage, yet declining return on equity highlights potential profitability concerns.Income Statement
McGrath Rentcorp's income statement shows a strong gross profit margin of 47.37% for TTM, indicating efficient cost management. However, the net profit margin has decreased to 15.62% from 25.44% in the previous year, reflecting a decline in profitability. The revenue growth rate is negative at -1.10% TTM, suggesting a contraction in sales. Despite these challenges, the company maintains a healthy EBIT margin of 24.73% and an EBITDA margin of 36.15% TTM, showcasing operational efficiency.Balance Sheet
The balance sheet reveals a moderate debt-to-equity ratio of 0.46 TTM, indicating a balanced approach to leveraging. Return on equity has decreased to 12.59% TTM from 20.63% in the previous year, pointing to reduced profitability for shareholders. The equity ratio stands at 50.88% TTM, reflecting a stable capital structure with a significant portion of assets financed by equity.Cash Flow
Cash flow analysis shows a significant decline in free cash flow growth at -43.92% TTM, raising concerns about cash generation. The operating cash flow to net income ratio is 1.14 TTM, indicating adequate cash flow relative to net income. However, the free cash flow to net income ratio has decreased to 0.71 TTM, suggesting less cash available after capital expenditures.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 931.22M | 910.94M | 831.84M | 635.66M | 616.83M | 572.55M |
| Gross Profit | 441.16M | 435.42M | 393.63M | 259.29M | 266.21M | 263.75M |
| EBITDA | 336.67M | 468.35M | 299.40M | 258.26M | 238.91M | 235.40M |
| Net Income | 145.43M | 231.73M | 174.62M | 115.14M | 89.70M | 101.98M |
Balance Sheet | ||||||
| Total Assets | 2.35B | 2.31B | 2.27B | 1.71B | 1.61B | 1.29B |
| Cash, Cash Equivalents and Short-Term Investments | 7.26M | 807.00K | 877.00K | 957.00K | 1.49M | 1.24M |
| Total Debt | 551.80M | 602.83M | 777.75M | 425.34M | 437.45M | 231.04M |
| Total Liabilities | 1.15B | 1.18B | 1.33B | 903.90M | 878.24M | 605.20M |
| Stockholders Equity | 1.20B | 1.12B | 933.80M | 803.95M | 732.02M | 682.60M |
Cash Flow | ||||||
| Free Cash Flow | 150.19M | 334.15M | -178.32M | -10.87M | 78.92M | 80.45M |
| Operating Cash Flow | 211.54M | 374.38M | 95.34M | 194.43M | 195.74M | 180.50M |
| Investing Cash Flow | -97.99M | -150.75M | -391.87M | -131.43M | -351.70M | -53.00M |
| Financing Cash Flow | -110.36M | -223.69M | 296.44M | -63.53M | 156.20M | -128.45M |
Mcgrath Rentcorp Technical Analysis
Positive
108.93
Price Trends
105.01
Positive
112.27
Negative
112.69
Negative
Market Momentum
0.49
Negative
57.38
Neutral
78.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGRC, the sentiment is Positive. The current price of 108.93 is above the 20-day moving average (MA) of 107.34, above the 50-day MA of 105.01, and below the 200-day MA of 112.69, indicating a neutral trend. The MACD of 0.49 indicates Negative momentum. The RSI at 57.38 is Neutral, neither overbought nor oversold. The STOCH value of 78.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGRC.
Mcgrath Rentcorp Risk Analysis
Mcgrath Rentcorp disclosed 42 risk factors in its most recent earnings report. Mcgrath Rentcorp reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Mcgrath Rentcorp Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.01B | 9.32 | 18.91% | 0.82% | 27.90% | 19.25% | |
73 Outperform | $7.67B | 16.24 | 16.26% | 1.75% | 1.68% | 9.91% | |
67 Neutral | $5.59B | -67.04 | -4.05% | 1.79% | 19.40% | -120.47% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $3.98B | 18.08 | 21.15% | 1.44% | -3.64% | 867.62% | |
58 Neutral | $2.68B | 18.34 | 12.70% | 1.79% | 4.77% | -35.44% | |
50 Neutral | $1.34B | -53.48 | -3.00% | ― | 7.39% | 34.57% |
* Industrials Sector Average
MGRC
Mcgrath Rentcorp
108.93
-3.67
-3.26%
WSC
WillScot Mobile Mini Holdings
21.29
-13.58
-38.95%
HRI
Herc Holdings
168.74
-11.22
-6.23%
R
Ryder System
190.04
36.28
23.60%
WLFC
Willis Lease Finance
147.80
-56.63
-27.70%
CTOS
Custom Truck One Source
5.92
1.42
31.56%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.