Quality Investor

McGrath RentCorp

Rank #368Capital ReturnWatchlistCompare with other stocks

MGRC · Nasdaq · Industrials

McGrath RentCorp (MGRC) — Rank #368 by gross profitability (GP/assets 0.18) · ROE 12.2% · Piotroski F-Score N/A.

As-of 2026-10-30 · 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

Company Snapshot

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

Market Cap

—

P/E (annual)

—

P/S (annual)

—

P/B

—

P/OCF (annual)

—

Shareholder Yield

—

Employees

1,306

Industry

Rental & Leasing Services

Exchange

Nasdaq

9/11

Flags passed

MGRC fails 2 critical flags

Passes 9 of 11 quality flags

  • FAIL
    Operating margin declining

    Operating margin lower than prior year

  • FAIL
    Valuation convergence

    EPS declining, shares diluting, and revenue growth decelerating simultaneously

  • PASS
    Gross margin holding
  • PASS
    Dilution within 2%
  • PASS
    FCF not negative from investment
  • PASS
    Disclosure consistent
  • PASS
    Revenue not declining
  • PASS
    Free cash flow intact
  • PASS
    Passes safety gate
  • PASS
    No competitive retreat
  • PASS
    SBC not compressing margin

Strengths Deferred revenue growing · Sequential beat (rev + EPS)

No data Balance sheet — not counted as a pass.

A count of the 12 warning flags that could be evaluated. Unweighted: colour follows the worst flag.

Quality Profile

Profitability

1/1 pass
GP / assets
0.18
Return on equity
12.2%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
1.02
Current ratio
—
Net cash
$1.04M

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%

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

Profitability

Does it make money well?

Warning: Operating margin declining · GP/assets 4th percentile of 96 SIC 73 peers

Gross profitability (GP / assets)

0.18

Primary signal (Novy-Marx).

4th pctl of 96 SIC 73 peers

Return on equity

12.2%

Gross margin

48.2%

31st pctl of 95 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%

Cash Flow Health

Is the cash real?

No warning flags · FCF 35% above net income

Free cash flow

$211.30M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF vs net income

35.2%

(FCF − net income) ÷ |net income|. Positive: cash above earnings. Negative: below.

FCF not below net income

Fails when free cash flow is below net income (yellow flag).

PASS

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

1.2%

Stock-based comp intensity.

Balance Sheet Strength

Can it survive a storm?

No warning flags · net cash $1.04M

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

1.02

37th pctl of 87 SIC 73 peers (best = lowest)

Current ratio

—

Quick ratio

—

Net cash

$1.04M

Cash & equivalents minus total debt.

Piotroski F-Score

N/A

Only 7/9 components determinable.

Valuation

Is the price reasonable?

Warning: Valuation convergence

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 1.02 · IC N/A1/5 Weak

Capital allocation quality

Composite score

3.0 / 5

Good
Share count trend
0.3%2/5 Fair
Buyback timing
N/AN/A
Dividend growth consistency
9 yr4/5 Strong
Net debt trajectory
-0.0%3/5 Good

Lifecycle Phase History

20202025
Value
Capital Return
Hypergrowth

Price History

MGRC+76.7% · +12.0% CAGRSPY+82.9% · +12.8% CAGR