McGrath RentCorp (MGRC) reported forecasted earnings growth of 9.27% per year and revenue growth of 4.6% per year, both of which trail the US market’s broader expectations of 15.5% and 10%, respectively. The company’s net profit margin decreased from 25.3% last year to 15.6%, following a period of strong historical earnings growth that averaged 20.3% per year over the past five years. Most recently, it recorded negative year-over-year earnings growth. Despite these recent declines, MGRC is trading near fair value with a P/E ratio of 19.4x, below industry and peer averages, and continues to offer high-quality earnings along with an appealing dividend for investors.
See our full analysis for McGrath RentCorp.
Now, let’s see how this latest crop of numbers lines up against the widely held narratives. This provides a chance to test which stories get confirmed and which offer new surprises.
See what the community is saying about McGrath RentCorp
NasdaqGS:MGRC Earnings & Revenue History as at Oct 2025
Utilization in key rental segments fell, with Mobile Modular dropping to 73.7% from 78.4% and Portable Storage down to 61.1% from 66.1%. This highlights cyclical stress in the company’s core markets.
Bears argue that ongoing declines in utilization and weaker demand could make future growth targets harder to achieve, especially as fleet underinvestment and unpredictable order flow may limit revenue momentum.
Persistently lower utilization puts pressure on recurring rental revenues and reduces operating leverage, a risk factor cited in analysts’ consensus view.
If the recent segment softness continues, consolidated revenue growth could trend below the company’s historical averages. This underlines revenue stability concerns.
Selling and general administrative expenses have increased as the company pushes hiring and invests in digital infrastructure. This raises the risk that operating costs will remain elevated if topline growth does not accelerate.
Analysts’ consensus view sees operational investment as a double-edged sword, likely improving long-term efficiency and margin potential but threatening short-term EBITDA margin compression if demand softens.
Margin trajectory is a key debate point. While technology upgrades may help expand margins, SG&A ramp-up combined with declining utilization can offset these gains in the near-term.
This margin tension is central to the narrative that MGRC’s position is attractive only if growth and efficiency materialize ahead of the cost increases. Otherwise, margins could lag peers.
MGRC’s share price of $114.50 sits just below the DCF fair value of $115.27 and remains well under the analyst target of $145.00, signaling a potential 27% upside if consensus expectations play out.
Analysts’ consensus view highlights a striking mismatch. The market currently assigns MGRC a P/E ratio of 19.4x, well beneath the industry average (22.8x) and far below the peer average (59.2x), yet their price target assumes a premium valuation (PE of 48.9x on 2028 earnings).
This gap implies confidence that recurring revenue, market expansion, and operational improvements will offset recent profit margin declines and could warrant a rerating in valuation multiples.
If margin compression or revenue growth disappoints, however, the ambitious price target may prove out of reach and the current discount to sector multiples could persist.
📊 Read the full McGrath RentCorp Consensus Narrative.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for McGrath RentCorp on Simply Wall St. Add the company to your watchlist or portfolio so you’ll be alerted when the story evolves.
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A great starting point for your McGrath RentCorp research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
MGRC’s declining fleet utilization, shrinking profit margins, and slowing revenue growth raise concerns about its ability to deliver reliable results during tough cycles.
If you want consistency instead, focus on companies that have shown steady revenue and earnings growth through changing markets by checking out stable growth stocks screener (2099 results).
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include MGRC.
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