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Mcgrath Rentcorp (MGRC)
NASDAQ:MGRC

Mcgrath Rentcorp (MGRC) AI Stock Analysis

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Mcgrath Rentcorp

(NASDAQ:MGRC)

Rating:78Outperform
Price Target:
$128.00
▲(13.85%Upside)
McGrath Rentcorp's strong financial performance and favorable valuation are key strengths, backed by stable technical indicators and optimistic earnings guidance. Challenges with certain revenue segments and economic uncertainties are noted but balanced by strategic growth opportunities.

Mcgrath Rentcorp (MGRC) vs. SPDR S&P 500 ETF (SPY)

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 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 Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 8.08%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mix of positive and negative aspects. There were notable revenue and EBITDA growths along with successful segments like Mobile Modular and TRS RenTelco. However, challenges such as a decline in portable storage revenue and lower fleet utilization were highlighted, compounded by economic uncertainties and potential impacts from tariffs.
Q1-2025 Updates
Positive Updates
Revenue and EBITDA Growth
Total company revenues increased 4% to $195.4 million, and adjusted EBITDA increased 3% to $74.5 million compared to a year earlier.
Mobile Modular Success
Mobile Modular's adjusted EBITDA increased 10% to $47.6 million, with rental revenues growing 3% and a 22% increase in rental-related services.
TRS RenTelco Improvement
TRS RenTelco saw a slight increase in rental revenues for the first time since Q1 2023, with total revenues increasing 4% to $35 million.
Cash Flow and Debt Reduction
Net cash from operating activities was $54 million, allowing for $12 million in shareholder dividends and reducing debt by $31 million.
Negative Updates
Decline in Portable Storage
Portable storage rental revenues declined by 13% due to ongoing commercial softness, with adjusted EBITDA decreasing by 25% compared to the prior year.
Lower Fleet Utilization
Average fleet utilization for Mobile Modular decreased to 74.6%, down from 78.7% a year ago, reflecting fewer units on rent.
Sales Revenue Decline in Mobile Modular
Sales revenues for Mobile Modular decreased by 11%, resulting in an $2.8 million drop to $22.5 million.
Economic and Tariff Uncertainty
Concerns about economic conditions, potential tariff impacts, and project delays or cancellations could affect future performance.
Company Guidance
During McGrath RentCorp's first quarter of 2025 earnings call, the company provided guidance for the year, projecting total revenue between $920 million and $960 million and adjusted EBITDA between $343 million and $355 million. The company noted a 4% increase in total revenues to $195.4 million for the quarter, with adjusted EBITDA rising 3% to $74.5 million. Mobile Modular's rental revenues grew by 3%, while Portable Storage rental revenues declined by 13%. TRS RenTelco saw rental revenues increase slightly, with improved utilization rates. The company highlighted ongoing economic uncertainties, including potential impacts from tariffs, though they expect these to have a limited effect on 2025 performance. McGrath is focused on expanding its geographic presence and maintaining strong cash flow, with gross rental equipment capital expenditures anticipated between $115 million and $125 million. Despite challenges, the company remains optimistic about its strategic initiatives and M&A opportunities to drive future growth.

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
85
Very Positive
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
78
Positive
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
82
Very Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
918.53M910.94M831.84M733.82M616.83M572.55M
Gross Profit
433.81M435.42M393.63M336.91M281.02M263.75M
EBIT
237.75M244.26M189.71M165.57M132.42M140.75M
EBITDA
470.53M468.35M299.40M276.91M239.12M235.40M
Net Income Common Stockholders
237.09M231.73M174.62M115.14M89.70M101.98M
Balance SheetCash, Cash Equivalents and Short-Term Investments
3.39M807.00K877.00K957.00K1.49M1.24M
Total Assets
2.24B2.28B2.22B1.71B1.60B1.28B
Total Debt
559.34M590.21M762.98M413.74M426.45M222.75M
Net Debt
555.95M589.40M762.10M412.79M424.96M221.52M
Total Liabilities
1.11B1.15B1.28B903.90M863.90M593.14M
Stockholders Equity
1.14B1.12B933.80M803.95M732.02M682.60M
Cash FlowFree Cash Flow
237.30M334.15M-178.32M-10.87M78.92M80.45M
Operating Cash Flow
368.84M374.38M95.34M194.43M195.74M180.50M
Investing Cash Flow
-75.34M-150.75M-391.87M-131.43M-351.70M-53.00M
Financing Cash Flow
-292.01M-223.69M296.44M-63.53M156.20M-128.45M

Mcgrath Rentcorp Technical Analysis

Technical Analysis Sentiment
Negative
Last Price112.43
Price Trends
50DMA
110.27
Positive
100DMA
114.17
Negative
200DMA
112.71
Negative
Market Momentum
MACD
0.87
Positive
RSI
46.59
Neutral
STOCH
30.44
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 112.43 is below the 20-day moving average (MA) of 114.70, above the 50-day MA of 110.27, and below the 200-day MA of 112.71, indicating a neutral trend. The MACD of 0.87 indicates Positive momentum. The RSI at 46.59 is Neutral, neither overbought nor oversold. The STOCH value of 30.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MGRC.

Mcgrath Rentcorp Risk Analysis

Mcgrath Rentcorp disclosed 41 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

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$2.80B11.7922.80%1.70%7.31%91.99%
HRHRI
66
Neutral
$3.78B25.399.60%2.46%8.34%-63.02%
66
Neutral
$4.50B12.265.40%3.65%4.17%-12.01%
WSWSC
59
Neutral
$4.87B296.451.28%1.05%-0.77%-94.12%
56
Neutral
$3.47B38.0015.74%1.16%-3.52%-46.60%
55
Neutral
$770.93M122.82-2.73%2.39%-4.11%-115.02%
HTHTZ
47
Neutral
$1.82B-244.63%-6.61%-1516.07%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MGRC
Mcgrath Rentcorp
112.43
8.60
8.28%
WSC
WillScot Mobile Mini Holdings
26.47
-11.83
-30.89%
HEES
H&E Equipment Services
94.64
51.68
120.30%
HRI
Herc Holdings
112.86
-15.60
-12.14%
HTZ
Hertz Global
5.92
2.64
80.49%
VSTS
Vestis Corporation
5.82
-5.90
-50.34%

Mcgrath Rentcorp Corporate Events

Executive/Board ChangesShareholder Meetings
McGrath RentCorp Shareholders Approve Key Proposals at Annual Meeting
Neutral
Jun 5, 2025

On June 4, 2025, McGrath RentCorp held its annual meeting of shareholders where several key proposals were voted on. The shareholders elected directors, ratified the appointment of Grant Thornton LLP as independent auditors for 2025, and approved the compensation of the company’s named executive officers on a non-binding, advisory basis.

The most recent analyst rating on (MGRC) stock is a Hold with a $131.00 price target. To see the full list of analyst forecasts on Mcgrath Rentcorp stock, see the MGRC Stock Forecast page.

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.