MGRC
McGrath RentCorp
$119.98
Platform & Compounding FCF
65%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 24.5% below fair value
You pay
$119.98
Bear
$110.70
Fair
$158.99
Bull
$207.06
Bear
$110.70
-7.7%
6% stage 1 growth, 11% discount
Fair
$158.99
+32.5%
11% stage 1 growth, 11% discount
Bull
$207.06
+72.6%
14% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
39%
Implied Market Multiple
17.1x
Market is pricing in (growth)
6.9%
vs 10.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $140.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $158.99 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions