Mcgrath Rentcorp (MGRC) AI Stock Analysis

• Market Cap: $2.70B
• Dividend Yield: 1.74%
• Average Volume (3M): 153.29K
• Price to Earnings (P/E): 11.4
• Beta (1Y): 0.69
• Revenue Growth: 7.31%
• EPS Growth: 91.99%
• Country: US
• Employees: 1,219
• Sector: Industrials
• Sector Strength: 78
• Industry: Rental & Leasing Services
• EPS (TTM): 9.65
• Shares Outstanding: 24,611,328
• 10 Day Avg. Volume: 160,045
• 30 Day Avg. Volume: 153,293
• PEG Ratio: 0.12
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 7.58
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $135.00
• Price Target Upside: 23.15% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

McGrath Rentcorp's overall score reflects a strong financial performance with growth in revenue and profitability. However, technical indicators show potential short-term market weakness, and valuation appears fair with a reasonable P/E ratio and dividend yield. The earnings call revealed both opportunities and challenges, particularly in certain business segments and amidst economic uncertainties. The emphasis on maintaining financial health and executing strategic initiatives will be crucial going forward.

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 sales of its modular buildings, electronic test equipment, and storage containers. Its revenue model is based on engaging in long-term and short-term lease agreements with businesses that require temporary or semi-permanent space solutions, technical equipment, or storage capabilities. The company also earns money through sales of new and used equipment and providing additional services such as delivery, installation, and maintenance. Key revenue streams include the modular division, which serves schools and businesses needing temporary classrooms or office spaces; the electronics division, offering test equipment to technology and telecom companies; and the portable storage and tank divisions, supplying containers and liquid containment solutions across various industries. Strategic partnerships with other companies in these markets and a focus on customer service and satisfaction help McGrath RentCorp maintain and grow its revenue base.

Mcgrath Rentcorp Financial Statement Overview

Summary

McGrath Rentcorp exhibits strong financial health with impressive revenue and profit growth, supported by stable margins and effective cash flow management. Despite an uptick in leverage, the balance sheet remains solid, and cash flow metrics highlight the company's capability to generate and utilize cash effectively. Continued attention to debt levels and capital expenditures will be crucial in maintaining this positive financial trajectory.

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

Mcgrath Rentcorp Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 109.62
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 109.62 is above the 20-day moving average (MA) of 104.87, below the 50-day MA of 111.16, and below the 200-day MA of 111.49, indicating a neutral trend. The MACD of -0.99 indicates Negative momentum. The RSI at 55.26 is Neutral, neither overbought nor oversold. The STOCH value of 86.96 is Negative, 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
MGRC	74 Outperform	$2.70B	11.36	22.80%	1.74%	7.31%	91.99%
HRI	61 Neutral	$3.27B	15.53	9.60%	2.32%	8.34%	-63.02%
Sector *	61 Neutral	$704.34M	7.17	6.37%	3.67%	1.48%	-24.42%
WSC	60 Neutral	$4.98B	184.71	1.28%	0.26%	-0.77%	-94.12%
VSTS	58 Neutral	$1.18B	124.20	1.06%	1.56%	―	―
HEES	56 Neutral	$3.33B	36.43	15.74%	1.21%	-3.52%	-46.60%
HTZ	55 Neutral	$2.06B	―	-176.39%	―	-3.44%	-581.59%

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.