Mcgrath Rentcorp (MGRC) AI Stock Analysis

• Market Cap: $2.79B
• Dividend Yield: 1.68%
• Average Volume (3M): 140.14K
• Price to Earnings (P/E): 11.8
• Beta (1Y): 0.71
• Revenue Growth: 7.31%
• EPS Growth: 91.99%
• Country: US
• Employees: 1,219
• Sector: Industrials
• Sector Strength: 93
• Industry: Rental & Leasing Services
• EPS (TTM): 1.15
• Shares Outstanding: 24,611,328
• 10 Day Avg. Volume: 125,413
• 30 Day Avg. Volume: 140,142
• PEG Ratio: 4.90
• Price to Book (P/B): 2.38
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 11.43
• Enterprise Value/Market Cap: 1.17
• Enterprise Value/Revenue: 0.91
• Enterprise Value/Gross Profit: 7.53
• Enterprise Value/Ebitda: 1.90
• 1Y Price Target: $139.00
• Price Target Upside: 22.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 79 Outperform
• Price Target: $128.00 ▲( 12.89% Upside)

McGrath Rentcorp's overall score reflects its strong financial performance with significant revenue and profit growth, balanced by moderate technical indicators and a favorable valuation. The earnings call highlights growth in key segments, though potential risks from economic uncertainties and specific revenue declines require attention. The company's solid financials and strategic focus provide a positive outlook, despite some challenges.

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 and leasing of its diverse product offerings. Its key revenue streams include the rental of modular buildings, which are used across various industries for temporary office space, classrooms, and other applications. Additionally, the company earns income from leasing electronic test equipment to technology and manufacturing sectors, enabling them to perform essential testing and measurement tasks. Portable storage units also contribute to the company's earnings, meeting the needs for on-site storage solutions. Significant partnerships with businesses and institutions across different sectors enhance its market reach and revenue potential. The company also offers related services, such as delivery and installation, which provide additional revenue opportunities.

Mcgrath Rentcorp Financial Statement Overview

Summary

McGrath Rentcorp demonstrates a solid financial foundation with strong revenue and profit growth, as well as robust cash flow management. The company's income statement shows impressive margins, though slight pressure on EBIT margin suggests potential challenges. The balance sheet highlights moderate leverage with a strong equity position, and cash flow metrics indicate efficient cash generation. Attention to debt levels and capital expenditures is important for maintaining financial health.

Income Statement

McGrath Rentcorp has demonstrated strong revenue growth with a consistent upward trajectory, as seen in the recent TTM figures compared to prior years. The company maintains robust profitability margins, with a Gross Profit Margin of 47.23% and a Net Profit Margin of 25.81% for the TTM. This indicates efficient cost management and a strong market position. However, the slight decrease in EBIT Margin from the previous year suggests potential cost pressures or investment in growth.

Balance Sheet

The balance sheet shows a healthy equity position with an Equity Ratio of 50.67%, indicating a solid financial foundation. The Debt-to-Equity Ratio of 0.49 suggests a moderate leverage level, providing a balance between risk and growth potential. Return on Equity is strong at 20.86% for the TTM, reflecting effective utilization of shareholder funds. However, the increase in Total Debt over recent years warrants monitoring for potential risks.

Cash Flow

McGrath Rentcorp's cash flow generation is robust, with a Free Cash Flow to Net Income Ratio of 1.00, indicating efficient conversion of profits into cash. The Operating Cash Flow to Net Income Ratio of 1.55 further underscores strong cash flow management. The Free Cash Flow Growth Rate is positive, reflecting the company's ability to support operations and investments. Despite the positive outlook, the substantial capital expenditures in recent years require careful management to sustain cash flow health.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
918.53M	910.94M	831.84M	733.82M	616.83M	572.55M
	Gross Profit
433.81M	435.42M	393.63M	336.91M	281.02M	263.75M
	EBIT
237.75M	244.26M	189.71M	165.57M	132.42M	140.75M
	EBITDA
470.53M	468.35M	299.40M	276.91M	239.12M	235.40M
	Net Income Common Stockholders
237.09M	231.73M	174.62M	115.14M	89.70M	101.98M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.91M	807.00K	877.00K	957.00K	1.49M	1.24M
	Total Assets
2.26B	2.28B	2.22B	1.71B	1.60B	1.28B
	Total Debt
798.56M	590.21M	762.98M	413.74M	426.45M	222.75M
	Net Debt
796.65M	589.40M	762.10M	412.79M	424.96M	221.52M
	Total Liabilities
1.32B	1.15B	1.28B	903.90M	863.90M	593.14M
	Stockholders Equity
943.02M	1.12B	933.80M	803.95M	732.02M	682.60M
Cash Flow		Free Cash Flow
237.30M	334.15M	-178.32M	-10.87M	78.92M	80.45M
	Operating Cash Flow
368.84M	374.38M	95.34M	194.43M	195.74M	180.50M
	Investing Cash Flow
-75.34M	-150.75M	-391.87M	-131.43M	-351.70M	-53.00M
	Financing Cash Flow
-292.01M	-223.69M	296.44M	-63.53M	156.20M	-128.45M

Mcgrath Rentcorp Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 113.38
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 113.38 is above the 20-day moving average (MA) of 111.67, above the 50-day MA of 109.87, and above the 200-day MA of 111.85, indicating a bullish trend. The MACD of 1.81 indicates Negative momentum. The RSI at 54.64 is Neutral, neither overbought nor oversold. The STOCH value of 41.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGRC.

Mcgrath Rentcorp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGRC	79 Outperform	$2.79B	11.75	22.80%	1.68%	7.31%	91.99%
HRI	68 Neutral	$3.58B	28.02	9.60%	2.14%	8.34%	-63.02%
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%
WSC	64 Neutral	$4.98B	303.22	1.28%	0.26%	-0.77%	-94.12%
HEES	56 Neutral	$3.47B	38.00	15.74%	1.16%	-3.52%	-46.60%
VSTS	55 Neutral	$788.06M	122.82	-2.73%	2.34%	-4.11%	-115.02%
HTZ	47 Neutral	$2.18B	―	-244.63%	―	-6.61%	-1516.07%

Mcgrath Rentcorp Corporate Events

McGrath RentCorp Appoints New Senior VP & CAO

On January 13, 2025, McGrath RentCorp’s Board of Directors appointed David M. Whitney as Senior Vice President, Chief Accounting Officer. Whitney, who joined the company in 2000 and served as Vice President, Principal Accounting Officer since 2006, brings extensive experience from his previous roles, including at The Permanente Medical Group.

McGrath RentCorp Promotes Hawkins to Chief Operating Officer

On January 13, 2025, McGrath RentCorp appointed Philip B. Hawkins as the Chief Operating Officer, effective immediately. Hawkins, who has been with the company for over 20 years, has held various leadership roles, most recently as Senior Vice President and Division Manager of Mobile Modular. His promotion is expected to enhance McGrath’s operational leadership as he oversees the Mobile Modular businesses and contributes to the company’s growth strategy. McGrath’s focus on modular solutions and Hawkins’ extensive experience positions the company to expand its market presence and operational efficiencies.