Mcgrath Rentcorp (MGRC) AI Stock Analysis

• Market Cap: $2.75B
• Dividend Yield: 1.79%
• Average Volume (3M): 109.59K
• Price to Earnings (P/E): 18.9
• Beta (1Y): 0.79
• Revenue Growth: 4.77%
• EPS Growth: -35.44%
• Country: US
• Employees: 1,219
• Sector: Industrials
• Sector Strength: 72
• Industry: Rental & Leasing Services
• EPS (TTM): 1.72
• Shares Outstanding: 24,611,656
• 10 Day Avg. Volume: 126,783
• 30 Day Avg. Volume: 109,587
• PEG Ratio: 0.37
• Price to Book (P/B): 2.44
• Price to Sales (P/S): 3.01
• P/FCF Ratio: 8.21
• Enterprise Value/Market Cap: 1.20
• Enterprise Value/Revenue: 3.54
• Enterprise Value/Gross Profit: 7.47
• Enterprise Value/Ebitda: 9.78
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 6.6
• Revenue Forecast (FY): $982.45M

• Rating: 58 Neutral
• Price Target: $122.00 ▲(5.04% Upside)

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

High Margins and Operational Efficiency

Sustained high gross and operating margins demonstrate structural cost advantages and pricing power in rental and services. Strong margins support reinvestment in fleet, buffer against demand cycles, and improve long-term cash available for maintenance, growth, and strategic initiatives.

Conservative Capital Structure

Moderate leverage and a roughly 51% equity ratio provide balance-sheet flexibility to fund capital expenditures and fleet renewal without excessive refinancing risk. This conservative structure supports durability through cyclical downturns and preserves capacity for strategic investments.

Segment Diversification and Public Funding Tailwinds

Robust TRS-RenTelco growth and healthy utilization signal secular demand in communications and specialty rentals. Coupled with large education facility bonds in CA and TX, diversified end markets and public funding create durable revenue tailwinds for modular and portable space demand over multiple years.

Negative Factors

Material Decline in Free Cash Flow

A near-44% drop in free cash flow materially reduces internally generated funding for fleet capex, debt servicing, and shareholder returns. For a capital-intensive rental business, weaker FCF undermines ability to sustain investment cycles and raises reliance on external financing over several quarters.

Revenue Contraction and Margin Compression

Negative revenue growth and a sharp drop in net margin indicate deteriorating top-line strength and reduced profitability. If persistent, these trends compress earnings power and limit reinvestment capacity, weakening long-term growth prospects for fleet-heavy rental operations.

Falling Asset Productivity and Utilization

Declining ROE alongside lower Mobile Modular utilization signals reduced capital efficiency and weaker fleet monetization. Persistently lower utilization erodes returns on invested capital, raising the risk that growth investments will generate lower long-term shareholder returns.

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

McGrath Rentcorp shows strong operational efficiency with high margins, but faces challenges in revenue growth and cash flow generation. The balance sheet is stable with moderate leverage, but declining return on equity raises 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

• Technical Analysis Sentiment: Positive
• Last Price: 116.15
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 116.15 is above the 20-day moving average (MA) of 110.47, above the 50-day MA of 106.48, and above the 200-day MA of 112.53, indicating a neutral trend. The MACD of 1.90 indicates Negative momentum. The RSI at 53.12 is Neutral, neither overbought nor oversold. The STOCH value of 51.56 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
R	73 Outperform	$7.72B	16.22	16.26%	1.75%	1.68%	9.91%
WLFC	72 Outperform	$1.24B	10.91	18.91%	0.82%	27.90%	19.25%
HRI	67 Neutral	$4.77B	-56.95	-4.05%	1.79%	19.40%	-120.47%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
WSC	62 Neutral	$3.64B	16.56	21.15%	1.44%	-3.64%	867.62%
MGRC	58 Neutral	$2.75B	18.91	12.70%	1.79%	4.77%	-35.44%
CTOS	50 Neutral	$1.43B	-57.09	-3.00%	―	7.39%	34.57%