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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on MGRC

McGrath RentCorp's recent performance was driven by strong Q2 earnings, with EPS jumping 74% year-over-year, beating Zacks Consensus Estimate. The company's solid results were fueled by growth in its Mobile Modular and TRS-RenTelco segments, which offset declines in Portable Storage. Despite reducing 2025 guidance due to project delays and economic uncertainty, management's confidence in the business is evident, as demonstrated by its participation in the CJS Securities 25th Annual "New Ideas" Summer Conference.

1.c. Company Highlights

2. McGrath RentCorp's Q3 2025 Earnings: A Mixed Bag

McGrath RentCorp reported a mixed financial performance in Q3 2025, with total revenues decreasing 4% to $256 million, while rental operations revenues increased by 4% across all three rental businesses. Adjusted EBITDA decreased 7% to $96.5 million. The company's EPS came in at $1.72, missing estimates of $1.83. Mobile Modular's rental revenues rose 2%, driven by commercial activity centered around larger infrastructure projects, while TRS-RenTelco had a strong quarter with total revenues up 6% to $36.9 million.

Publication Date: Oct -27

📋 Highlights
  • Rental Revenue Growth:: Total rental operations increased 4% YoY, with TRS-RenTelco leading at 6% ($36.9M revenue) and Mobile Modular up 2%, driven by infrastructure projects.
  • Adjusted EBITDA Decline:: Adjusted EBITDA fell 7% to $96.5M, with Portable Storage down 14% due to lower utilization (61.4%) and Mobile Modular sales revenues dropping 21%.
  • Full-Year Outlook Revised:: Revenue guidance raised to $935–$955M; EBITDA projected at $350–$357M, with $120–$125M allocated for rental equipment capex.
  • Education Sector Tailwind:: Strong demand for large projects in education, fueled by funding stability, and optimism about future funding despite macroeconomic headwinds.

Segment Performance

The company's rental businesses showed varying degrees of success, with Mobile Modular's operating performance seeing 2% higher rental revenues and 5% higher rental-related services revenues. TRS-RenTelco rental revenue grew by 9%, with utilization at a healthy 65% and rental margins improving 43%. Portable Storage rental revenues increased 1% year-over-year, with average utilization at 61.4%. As Joseph Hanna noted, "the business is a tailwind for the company" particularly in the education sector where funding is very good.

Outlook and Guidance

The company has upwardly revised its full-year financial outlook, expecting total revenue between $935 million and $955 million, adjusted EBITDA between $350 million and $357 million. Analysts estimate next year's revenue growth at 4.7%. With a healthy pipeline of opportunities, McGrath RentCorp is well-positioned for future growth.

Valuation

With a P/E Ratio of 19.38, P/B Ratio of 2.36, and EV/EBITDA of 9.99, the company's valuation appears reasonable. The dividend yield of 1.69% and Free Cash Flow Yield of 5.33% also suggest a stable return profile. The ROIC of 17.39% indicates a strong ability to generate returns on invested capital.

Growth Initiatives

McGrath RentCorp is actively exploring new markets and hiring salespeople in areas with business potential. The company's growth initiatives, such as the services side of modulars and regional expansion, are expected to help counterbalance headwinds from the Architectural Billings Index, high interest rates, and policy uncertainty.

3. NewsRoom

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Envestnet Asset Management Inc. Acquires 536 Shares of McGrath RentCorp $MGRC

Nov -17

Source: defenseworld.net

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Asset Management One Co. Ltd. Has $5.24 Million Holdings in McGrath RentCorp $MGRC

Oct -29

Source: defenseworld.net

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McGrath RentCorp (MGRC) Q3 2025 Earnings Transcript

Oct -24

Source: fool.com

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McGrath RentCorp (MGRC) Q3 2025 Earnings Call Transcript

Oct -23

Source: seekingalpha.com

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McGrath (MGRC) Lags Q3 Earnings and Revenue Estimates

Oct -23

Source: zacks.com

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McGrath (MGRC) is a Great Momentum Stock: Should You Buy?

Sep -12

Source: zacks.com

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McGrath RentCorp Remains Attractive, Though Upside Is Limited

Sep -11

Source: seekingalpha.com

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McGrath RentCorp Q2 EPS Jumps 74 Percent

Jul -25

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.52%)

6. Segments

Mobile Modular

Expected Growth: 2.5%

Mobile Modular's 2.5% growth is driven by increasing demand for temporary space solutions in education, healthcare, and construction industries. Expanding rental fleet, strategic acquisitions, and a strong backlog of orders also contribute to growth. Additionally, McGrath RentCorp's diversification efforts and cost-saving initiatives enhance operational efficiency, further supporting segment growth.

TRS-RenTelco

Expected Growth: 2.8%

TRS-RenTelco's 2.8% growth is driven by increasing demand for temporary equipment rentals in the non-residential construction market, coupled with McGrath RentCorp's strategic expansion into new geographic markets and product offerings. Additionally, the company's focus on operational efficiency and cost management has enabled it to maintain a competitive pricing strategy, further fueling growth.

Portable Storage

Expected Growth: 2.2%

The 2.2% growth in Portable Storage from McGrath RentCorp is driven by increasing demand for temporary storage solutions in construction, oil and gas, and government sectors. Additionally, the need for flexible and secure storage options for remote projects and events contributes to the growth. Furthermore, the company's strategic expansion into new markets and its focus on providing value-added services also support the growth momentum.

Enviroplex

Expected Growth: 2.6%

Enviroplex's 2.6% growth is driven by increasing demand for portable storage solutions, expansion into new markets, and a growing need for environmentally friendly storage options. Additionally, McGrath RentCorp's strategic acquisitions and investments in technology have enhanced operational efficiency, contributing to the segment's growth.

7. Detailed Products

Mobile Modular Classrooms

Temporary or permanent modular classrooms for schools and educational institutions

Portable Storage Containers

Secure, portable storage containers for rent or sale

Modular Office Buildings

Temporary or permanent modular office buildings for construction sites, events, or remote workspaces

Liquid and Solid Waste Containment Solutions

Containment solutions for liquid and solid waste, including tanks, boxes, and filters

Tank and Pump Rentals

Rental of tanks and pumps for liquid storage and transfer

Electrical Distribution Equipment Rentals

Rental of electrical distribution equipment, including generators, switchgear, and distribution panels

8. McGrath RentCorp's Porter Forces

Forces Ranking

Threat Of Substitutes

McGrath RentCorp's equipment rental services can be substituted with purchasing equipment, but the high upfront costs and maintenance requirements make rental services a more attractive option for many customers.

Bargaining Power Of Customers

McGrath RentCorp's customers have limited bargaining power due to the company's diverse customer base and lack of concentration in any one industry or customer segment.

Bargaining Power Of Suppliers

McGrath RentCorp's suppliers have some bargaining power due to the specialized nature of the equipment they provide, but the company's long-term relationships and diversified supplier base mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory hurdles associated with entering the equipment rental industry.

Intensity Of Rivalry

The equipment rental industry is highly competitive, with several established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.44%
Debt Cost 7.10%
Equity Weight 54.56%
Equity Cost 8.00%
WACC 7.59%
Leverage 83.29%

11. Quality Control: McGrath RentCorp passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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McGrath Rent

A-Score: 6.4/10

Value: 4.6

Growth: 7.8

Quality: 6.6

Yield: 4.0

Momentum: 6.5

Volatility: 8.7

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FTAI Aviation

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Quality: 8.5

Yield: 6.0

Momentum: 5.0

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Avis Budget Group

A-Score: 5.6/10

Value: 9.6

Growth: 5.8

Quality: 5.0

Yield: 1.0

Momentum: 9.5

Volatility: 2.7

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Fortress Transportation

A-Score: 5.1/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 3.3

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FTAI Aviation

A-Score: 4.9/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 5.0

Momentum: 6.5

Volatility: 2.0

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Herc

A-Score: 4.5/10

Value: 8.0

Growth: 7.0

Quality: 3.8

Yield: 3.0

Momentum: 2.0

Volatility: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

103.11$

Current Price

103.11$

Potential

-0.00%

Expected Cash-Flows