Mcgrath Rentcorp (MGRC) AI Stock Analysis

• Market Cap: $2.73B
• Dividend Yield: 1.79%
• Average Volume (3M): 131.10K
• Price to Earnings (P/E): 17.5
• Beta (1Y): 0.75
• Revenue Growth: 4.77%
• EPS Growth: -35.44%
• Country: US
• Employees: 1,219
• Sector: Industrials
• Sector Strength: 72
• Industry: Rental & Leasing Services
• EPS (TTM): 2.02
• Shares Outstanding: 24,611,656
• 10 Day Avg. Volume: 115,041
• 30 Day Avg. Volume: 131,105
• PEG Ratio: -0.50
• Price to Book (P/B): 2.09
• Price to Sales (P/S): 2.73
• P/FCF Ratio: 12.22
• Enterprise Value/Market Cap: 1.19
• Enterprise Value/Revenue: 3.44
• Enterprise Value/Gross Profit: 7.22
• Enterprise Value/Ebitda: 9.25
• 1Y Price Target: $141.50
• Price Target Upside: 27.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 6.65
• Revenue Forecast (FY): $982.45M

• Rating: 70 Outperform
• Price Target: $127.00 ▲(14.47% Upside)
• Action: Upgraded Date: 02/26/26
• Date: Action: Upgraded 02/26/26

The score is driven primarily by solid underlying financial performance (growth, resilient gross margins, and improving leverage) tempered by recent net margin compression and uneven cash-flow history. Technicals are modestly supportive with neutral momentum, while valuation is mid-range with a moderate dividend. The latest earnings call reinforces a cautious-but-constructive outlook, and the CEO succession looks orderly.

Positive Factors

Revenue and Gross Margin Resilience

Consistent multi-year revenue growth and gross margins near the high-40% range provide durable operating leverage. This margin resilience supports sustained cash generation and reinvestment capacity, helping buffer the business through cyclical soft patches and fund dividends and targeted expansion.

Improving Leverage / Balance Sheet

Debt has declined from peak levels and equity has grown, leaving funded debt at manageable ratios (net borrowings $515M; funded debt/LTM adj. EBITDA ~1.42x). That stronger leverage profile preserves financial flexibility to fund capex, geographic expansion and dividends without unduly stressing liquidity.

Segment Diversification and TRS Recovery

A recovering TRS (strong revenue and margin gains) combined with growth in Mobile Modular services increases revenue diversification into higher‑margin, less cyclical streams. This structural mix shift enhances earnings stability and allows scalable returns as management allocates targeted capital to TRS and services.

Negative Factors

Net Margin Compression

Net margin deterioration in 2025, despite revenue growth, signals margin pressure from mix, utilization or cost increases. Reduced net margins weaken earnings resilience, limit cash available for reinvestment or dividends, and raise execution risk in meeting profitability targets if headwinds persist.

Uneven Cash Flow Profile

Historic lumpiness—including a negative FCF year in 2023—shows cash generation can be volatile due to investment timing and fleet moves. This unevenness complicates predictable capital allocation, may force incremental borrowing in down cycles, and raises risk for consistent dividend and expansion funding.

Exposure to Soft Construction / Low Utilization

Structural weakness in nonresidential construction and declining utilization (Mobile 71.3% from 76%) constrain rental growth and pressure portable storage profitability. Prolonged soft end-market demand and competitive delivery pricing can depress utilization‑driven economics and curb margin recovery.

Mcgrath Rentcorp Business Overview & Revenue Model

Company Description

McGrath 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 Money

McGrath 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 Financial Statement Overview

Summary

Solid multi-year revenue expansion and resilient gross margins, supported by a sound balance sheet with improving leverage. Offsets include the notable 2025 net margin compression and uneven cash flow history (including a significant free-cash-flow drawdown in 2023), which raise earnings/cash consistency risk.

Income Statement

Revenue expanded steadily from 2020 to 2025 (annual growth ranging from low-single-digits to strong double-digits, with a very strong jump in 2025). Profitability is solid with gross margin holding near the high-40% range in recent years. However, net margin compressed notably in 2025 versus 2024 (despite higher revenue), and profitability has shown some volatility across the period, which tempers the score.

Balance Sheet

Leverage is moderate and improving: debt relative to equity declined meaningfully from the 2023 peak to 2025, and equity has grown over time. Returns on equity have been healthy overall, though they stepped down in 2025 versus 2024, suggesting weaker earnings efficiency most recently. Overall, the balance sheet looks sound with manageable debt levels, but earnings-related softness in the latest year is a watch item.

Cash Flow

Cash generation is generally supportive, with positive free cash flow in most years and strong free cash flow growth in 2024 and 2025. Operating cash flow has covered net income well in several years, but the profile is uneven: 2023 saw weak operating cash flow and materially negative free cash flow, highlighting potential lumpiness tied to investment needs. 2025 free cash flow covered a large portion of earnings, though not as strongly as 2024.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	944.24M	910.94M	831.84M	635.66M	616.83M
Gross Profit	434.84M	435.42M	393.63M	259.29M	266.21M
EBITDA	350.77M	468.35M	299.40M	258.26M	238.91M
Net Income	156.31M	231.73M	174.62M	115.14M	89.70M
Balance Sheet
Total Assets	2.36B	2.31B	2.27B	1.71B	1.61B
Cash, Cash Equivalents and Short-Term Investments	295.00K	807.00K	877.00K	957.00K	1.49M
Total Debt	514.92M	602.83M	777.75M	425.34M	437.45M
Total Liabilities	1.12B	1.18B	1.33B	903.90M	878.24M
Stockholders Equity	1.24B	1.12B	933.80M	803.95M	732.02M
Cash Flow
Free Cash Flow	211.30M	334.15M	-178.32M	-10.87M	78.92M
Operating Cash Flow	255.68M	374.38M	95.34M	194.43M	195.74M
Investing Cash Flow	-127.11M	-150.75M	-391.87M	-131.43M	-351.70M
Financing Cash Flow	-129.08M	-223.69M	296.44M	-63.53M	156.20M

Mcgrath Rentcorp Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 110.95
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGRC, the sentiment is Negative. The current price of 110.95 is below the 20-day moving average (MA) of 115.69, below the 50-day MA of 111.71, and below the 200-day MA of 113.52, indicating a bearish trend. The MACD of 0.33 indicates Positive momentum. The RSI at 42.64 is Neutral, neither overbought nor oversold. The STOCH value of 54.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MGRC.

Mcgrath Rentcorp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WLFC	72 Outperform	$1.39B	12.19	18.91%	0.82%	27.90%	19.25%
MGRC	70 Outperform	$2.73B	17.48	13.24%	1.79%	4.77%	-35.44%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
R	61 Neutral	$8.74B	18.67	16.15%	1.75%	1.68%	9.91%
HRI	58 Neutral	$4.66B	4,368.44	0.06%	1.79%	19.40%	-120.47%
WSC	51 Neutral	$3.91B	-71.65	-5.65%	1.44%	-3.64%	867.62%
CTOS	50 Neutral	$1.62B	-64.68	-3.00%	―	7.39%	34.57%

Mcgrath Rentcorp Corporate Events

McGrath RentCorp announces planned CEO succession and transition

On February 5, 2026, McGrath RentCorp announced that longtime President and Chief Executive Officer Joseph F. Hanna will retire from his executive roles effective April 3, 2026, while remaining on the company’s board of directors. The board has appointed current Executive Vice President and Chief Operating Officer Philip B. Hawkins to succeed Hanna as President, CEO and director as of the same date, and has amended the company’s bylaws to expand the board from six to seven members to accommodate the leadership transition. The move, described by the board as the culmination of a long-planned succession process, is intended to ensure continuity of McGrath’s strategic direction and growth trajectory, with Hawkins’ deep industry experience and long tenure at the company expected to support its ongoing momentum in key markets and provide stability for shareholders and employees during the change in leadership.

The most recent analyst rating on (MGRC) stock is a Hold with a $124.00 price target. To see the full list of analyst forecasts on Mcgrath Rentcorp stock, see the MGRC Stock Forecast page.