Quality Investor

McGrath RentCorp

Rank #382Capital Return

MGRC · Nasdaq · Industrials

McGrath RentCorp (MGRC) — Rank #382 by gross profitability (GP/assets 0.18) · ROE 12.6% · Piotroski F-Score N/A.

As-of 2026-09-15 · CIK 0000752714 · all metrics point-in-time as of the filing date.

About

McGrath RentCorp operates as a business-to-business rental company in the United States and internationally.

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The company also engages in renting and selling relocatable modular buildings, portable storage containers, and electronic test equipment. The company operates through four segments: Mobile Modular, Portable Storage, TRS-RenTelco, 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, childcare facilities, office spaces, and various other purposes. The Portable Storage segment offers steel containers, such as storage and office containers, to provide temporary storage solutions to construction, retail, commercial and industrial, energy and petrochemical, manufacturing, education, and healthcare markets. 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 for the aerospace, defense, electronics, industrial, research, and semiconductor industries. This segment 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 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 based in Livermore, California.

Industry
Rental & Leasing Services
Sector
Industrials
State
CA
Filer Category
Large accelerated filer
Fiscal Year End
December 31
Website
mgrc.com

Price History

MGRC+70.1% · +11.2% CAGRSPY+80.5% · +12.5% CAGR

Company Snapshot

P/E and reverse DCF are the primary valuation lenses at this stage.

Market Cap

$2.68B

P/E (annual)

17.3

P/S (annual)

2.8

P/B

2.1

P/OCF (annual)

10.5

Shareholder Yield

1.5%

Employees

1,306

Industry

Rental & Leasing Services

Exchange

Nasdaq

Signal Flags

2 green2 red
Deferred revenue growingRevenue and deferred revenue both growing — retention signal
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 2-quarter streak
Operating margin decliningOperating margin lower than prior year
Valuation convergenceEPS declining, shares diluting, and revenue growth decelerating simultaneously

Quality Profile

Profitability

1/1 pass
GP / assets
0.18
Return on equity
12.6%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
1.01
Current ratio
Net cash
$4.38M

Cash Flow

3/3 pass
Positive FCF
PASS
Cash-backed earnings
PASS
Accruals healthy
PASS
SBC / revenue
1.2%

Growth

2/2 pass
Revenue growth
3.7%
Piotroski F-Score
N/A
Share dilution
0.3%

Terry Smith quality gate

Passes 2/5 Terry Smith thresholds

2 of 5 thresholds not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

1.6%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Dilution drag: 0.3% — per-share value needs a total required return of 1.8% once share-count change is priced in.

vs. own 6-year median revenue growth: 8.6%

within its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

-2.4%

r = 10% (base)

1.6%

r = 12%

5.0%

Net debt / market cap: -0.2%

Base FCF: $211.3M3Y mean FCF: $198.9M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

18.2xFair
7.6xmed 18.5x23.5x

P / S

Price / revenue per share

3.0xFair
2.1xmed 3.2x3.7x

P / B

Price / book value per share

2.3xFair
2.2xmed 2.6x3.3x

P / GP

Price / gross profit per share

6.3xFair
4.9xmed 6.6x7.9x

P / FCF

Price / free cash flow per share

13.5xExpensive
6.9xmed 10.7x60.6x

FCF yield, shareholder yield, and buyback activity are the primary reads at this stage.

Profitability

Gross profitability (GP / assets)

0.18

Primary signal (Novy-Marx).

6th pctl of 98 SIC 73 peers

Return on equity

12.6%

Gross margin

48.2%

31st pctl of 97 SIC 73 peers

Revenue growth (YoY)

3.7%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

14.1%

Revenue CAGR (5Y)

10.5%

Earnings CAGR (3Y)

10.7%

FCF CAGR (3Y)

6.1%

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

1.01

38th pctl of 87 SIC 73 peers (best = lowest)

Current ratio

Quick ratio

Net cash

$4.38M

Cash & equivalents minus total debt.

Recession resistance

Revenue through recessions

Worst single-year YoY revenue decline, 17 years of history

Strong
2008-2009 (GFC)
N/AN/A
2020 (COVID)
0.4%Grew through it
Worst year on record(any fiscal year, not recession-limited)
-0.9%Mild decline

Cash-flow health

Free cash flow

$211.30M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

0.35

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

1.2%

Stock-based comp intensity.

Dividend safety

Composite score

3.5 / 5

Good
Payout ratio
30.6%4/5 Strong
FCF coverage
4.41×5/5 Strong
Dividend growth streak
9 yr4/5 Strong
Balance-sheet health
D/E 1.01 · IC N/A1/5 Weak

Piotroski F-Score

F-Score

N/A

Only 7/9 components determinable.

Lifecycle Phase History

20202025
Value
Capital Return
Hypergrowth