McGrath RentCorp (MGRC) stock analysis

P/E above its 5-year median

McGrath RentCorp's P/E of 19.8 is above its own 5-year median of 18.3.

P/E above the industry

McGrath RentCorp's P/E of 19.8 is above the Miscellaneous Equipment Rental and Leasing median of 19.8.

EV/EBITDA above its 5-year median

McGrath RentCorp's EV/EBITDA of 8.8 is above its 5-year median of 8.4.

P/B below the industry

McGrath RentCorp's price-to-book of 2.46 is below the Miscellaneous Equipment Rental and Leasing median of 2.93.

Trading above fair value

The share price of $128.79 is above our fair value estimate of $126.06.

Margin of safety under 20%

The price is 2.2% above fair value, so there is no margin of safety.

Revenue growing 10%+ a year

Revenue grew 14.1% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 10.5% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 9.6% over the last twelve months, against a 5-year average of 8.9% a year.

Growing slower than the industry

Revenue grew 2.1% over the last twelve months; the Miscellaneous Equipment Rental and Leasing median is 9.4%.

Guidance issued

The latest outlook (remainder of 2026 Total revenue, Oct 28, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 48.8% over the last twelve months, against 47.4% a year earlier.

Return on equity under 15%

Return on equity was 12.9% over the last twelve months and averaged 16.7% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 14.6%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

McGrath RentCorp's return on equity of 12.9% is below the Miscellaneous Equipment Rental and Leasing median of 12.9%.

Earnings grew over 5 years

Net income grew 8.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 16.8% over the last twelve months, against a 5-year average of 19.6%.

Net margin above the industry

McGrath RentCorp's net margin of 16.8% is above the Miscellaneous Equipment Rental and Leasing median of 5.4%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt coverage

Needs operating cash flow.

Interest well covered

Operating income covers interest expense 8.7 times.

Short-term liquidity

The balance sheet is not split into current and non-current items.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.76; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

McGrath RentCorp paid dividends worth 1.5% of the share price over the last twelve months.

Yield below Treasuries

The 1.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; McGrath RentCorp yields 1.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 30.6% of net income.

Covered by free cash flow

Dividends take 23.2% of free cash flow.