MGRC
McGrath RentCorp
$112.61
Platform & Compounding FCF
65%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 39.2% below fair value
You pay
$112.61
Bear
$129.73
Fair
$185.28
Bull
$240.56
Bear
$129.73
+15.2%
6% stage 1 growth, 11% discount
Fair
$185.28
+64.5%
11% stage 1 growth, 11% discount
Bull
$240.56
+113.6%
14% stage 1 growth, 11% discount
Adjust Assumptions
10.5%
11.0%
3.0%
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
39%
Implied Market Multiple
14.5x
Market is pricing in (growth)
4.7%
vs 10.5% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$141.50
Divergence from AlphaVal
31%
Summary
Using a two-stage FCF DCF with 11% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $185.28 per share.
Warnings
Wall Street's average price target is $141.50 (from 5 analysts). Our estimate is 31% above the consensus -- consider that gap carefully.
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