Is It Time To Consider Buying McGrath RentCorp (NASDAQ:MGRC)?

McGrath RentCorp (NASDAQ:MGRC), is not the largest company out there, but it saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a US$2.1b market cap stock, it seems odd McGrath RentCorp is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine McGrath RentCorp’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for McGrath RentCorp

What's The Opportunity In McGrath RentCorp?

Good news, investors! McGrath RentCorp is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $115.21, but it is currently trading at US$86.02 on the share market, meaning that there is still an opportunity to buy now. McGrath RentCorp’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will McGrath RentCorp generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 28% over the next couple of years, the future seems bright for McGrath RentCorp. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? Since MGRC is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MGRC for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MGRC. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing McGrath RentCorp at this point in time. For example - McGrath RentCorp has 1 warning sign we think you should be aware of.

If you are no longer interested in McGrath RentCorp, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.