Title

Earning Preview: McGrath RentCorp this quarter’s revenue is expected to increase by 2.99%, and institutional views are bullish

Abstract

McGrath RentCorp will announce quarterly results on February 25, 2026 Post Market; this preview highlights revenue, margins, EPS and segment trends and assesses what investors should watch in the upcoming release.

Market Forecast

Forecasts for the quarter to be reported point to revenue of $254.32 million, up 2.99% year over year, EPS of $1.71, up 15.16% year over year, and EBIT of $66.60 million, up 10.09% year over year. Margin projections were not disclosed; the focus remains on top-line resilience and earnings efficiency as the company moves through late-cycle dynamics.

The main business is expected to benefit from stable leasing and project activity with disciplined pricing and utilization. Mobile Modular remains the core contributor, generating $181.47 million last quarter; the most promising segment in the near term is electronic test equipment rental, supported by improving equipment turnover and utilization, with last quarter revenue of $36.89 million and a constructive near-term trajectory.

Last Quarter Review

McGrath RentCorp delivered revenue of $256.44 million, a gross profit margin of 46.50%, GAAP net profit attributable to the parent company of $42.30 million, a net profit margin of 16.49%, and EPS of $1.72; revenue declined 3.87% year over year and EPS decreased 8.02% year over year.

A notable highlight was sequential earnings momentum, with net profit rising 17.58% quarter over quarter against a backdrop of disciplined operating expense control and stable rental economics. The main businesses showed a balanced contribution: Mobile Modular delivered $181.47 million, electronic test equipment rental contributed $36.89 million, portable storage provided $24.40 million, and Enviroplex added $13.68 million, with total company revenue down 3.87% year over year amid late-year project timing effects.

Current Quarter Outlook

Mobile Modular: The Core Cash Generator

Mobile Modular remains the backbone of the company’s model, and the quarter’s performance will hinge on the interplay between lease rates, utilization, and order conversion across education and commercial applications. Last quarter’s $181.47 million revenue gives a clear base of scale, and the segment’s economics typically benefit from stickier lease contracts and favorable renewal dynamics. For the quarter ahead, pricing discipline and unit availability are likely to support modest revenue stability, while the mix between short-term and long-term rentals will influence margin realization and free cash flow timing.

Project cadence is a crucial variable this quarter, particularly where modular deployments are tied to budget cycles that often consolidate in the late winter period. Strong execution in delivery and installation can translate into earlier revenue recognition, while any delays could push revenue into subsequent months. Given last quarter’s robust gross margin of 46.50% at the company level, investors should watch whether Mobile Modular’s mix and contract renewals sustain margin levels close to that benchmark, even if top-line growth remains measured.

Another dimension is the manufacturing link to Enviroplex, which can create internal efficiencies and consistency in project execution where applicable. While Enviroplex is a smaller revenue contributor at $13.68 million, coordinated scheduling across manufacturing and rental deployments can enhance conversions for Mobile Modular contracts. The key swing factor for this quarter will be whether the order book converts on schedule, lifting utilization without requiring aggressive discounting.

Electronic Test Equipment Rental: An Improving Utilization Story

The electronic test equipment rental segment produced $36.89 million last quarter and appears positioned for sequential improvement as equipment circulation and utilization trends stabilize. This business is sensitive to customer validation cycles and testing needs; forward indicators suggest the quarter could see firmer throughput, allowing revenue to align with the company’s broader forecast trajectory. As utilization rises, the segment typically benefits from improved rental yields, which supports EBIT leverage.

Within the quarter, watch for commentary on turn times and renewal rates. Shorter turn times can lift availability and reduce idle periods, improving effective utilization and pricing power on high-demand units. Although the company-level forecasts call for EPS up 15.16% and EBIT up 10.09% year over year, achieving those figures will likely require this segment to contribute margin-accretive growth relative to the prior quarter’s level, especially if other units track flat to slightly higher on activity. Keeping write-downs and maintenance intensity contained is another lever for sustaining margins.

Given the segment’s scale relative to Mobile Modular, even modest growth here can meaningfully contribute to the company’s EBIT outlook. If the quarter reveals renewed demand from customers with multi-quarter validation cycles, this unit can serve as a positive pivot point for the consolidated earnings trajectory, supporting the current quarter EPS estimate of $1.71.

Portable Storage: Steady Contribution and Mix Effects

Portable storage posted $24.40 million last quarter and tends to provide a steady contribution with less volatility than larger segments. This quarter, the mix between short-term bookings and regional demand pockets will determine whether revenue tracks close to last quarter’s level or shows incremental gains. Pricing elasticity is generally moderate, and the segment’s contribution to consolidated margins depends on fleet utilization and minimal downtime, which management has historically prioritized.

A key aspect to monitor is the alignment of portable storage deployments with Mobile Modular projects. When integrated deployments occur, logistics and scheduling efficiencies can reduce costs and enhance margin at the consolidated level. If the company reports improved utilization within portable storage, it would support the broader EBIT growth projection and balance risk if another segment experiences timing delays.

While not the largest revenue driver, portable storage can quietly influence quarterly margin outcomes through operational discipline. For this quarter, the segment’s ability to maintain stable revenue and reliable cash conversion would be a constructive sign that supports the forecast framework.

Enviroplex: Execution, Throughput, and Backlog Conversion

Enviroplex generated $13.68 million last quarter and sits as a complementary unit that can affect the cadence of Mobile Modular placements. For the current quarter, throughput and backlog conversion will be critical. If projects move smoothly through production and installation, the company can capture revenue earlier and potentially improve consolidated utilization metrics across the rental fleet.

Investors should pay attention to commentary on supply chain timing and production scheduling. Even modest improvements in throughput can reduce slippage, helping consolidated results meet or exceed the forecasted revenue of $254.32 million. The link between Enviroplex execution and Mobile Modular deployment remains a practical lever; when synchronized, the efficiency gains can be measurable at the margin line.

As the smallest of the reported units, Enviroplex’s direct P&L impact is limited relative to the core rental segments. However, its influence on timing and execution is not trivial, and a smooth quarter here can de-risk the top-line forecast and support EBIT consistency near the $66.60 million estimate.

What Will Drive the Stock Price This Quarter

The stock’s near-term movement will be driven by whether reported revenue and EPS align with or exceed the $254.32 million and $1.71 forecasts, and how margins compare to last quarter’s 46.50% gross margin and 16.49% net profit margin. A clean beat on EPS combined with stable or improving margins would likely be viewed favorably, particularly as last quarter saw year-over-year declines for both revenue and EPS. Conversely, slippage in project timing that defers revenue could weigh on sentiment even if backlog remains intact.

Segment mix will matter. If Mobile Modular holds firm while electronic test equipment rental shows utilization-driven improvement, the consolidated EBIT outlook of $66.60 million has better support. Watch for management commentary on lease rate trends, renewal pricing, and utilization recoveries; these metrics offer a direct line of sight to margin performance and cash generation.

Capital allocation signals will also be important. Investors will parse any commentary on fleet investment, maintenance capital, and balance sheet discipline to gauge the durability of earnings quality. Positive signals on cash conversion and restrained operating expense growth would strengthen confidence in the EPS trajectory. Guidance for the upcoming periods—especially the shape of revenue growth and margin sustainability—will likely be as influential as the headline figures themselves in setting the stock’s direction.

Analyst Opinions

Bullish views dominate in the current period, with no conflicting bearish calls identified; the ratio of bullish to bearish opinions stands at 100% to 0% based on the collected items within the time window. Barclays initiated coverage with an Overweight rating and a $140.00 price target, reflecting confidence in the earnings trajectory implied by forecasts for EPS growth of 15.16% and EBIT growth of 10.09% year over year. The prevailing consensus points to a Buy stance and price targets that align with continued execution across core rental units and improving utilization in electronic test equipment.

The bullish camp’s core arguments emphasize three pillars. First, the expected rebound in earnings efficiency—captured by the $1.71 EPS estimate—is viewed as achievable if Mobile Modular maintains pricing discipline and utilization while segment timing improves. Second, EBIT leverage appears intact if the company sustains operational control and reduces idle fleet periods, providing cushion even with measured top-line growth of 2.99% year over year. Third, segment mix can modestly enhance margins this quarter: steady portable storage, synchronized Enviroplex throughput, and healthier utilization in electronic test equipment rental are collectively supportive of consolidated profitability.

Importantly, analysts in the bullish majority view last quarter’s sequential net profit improvement of 17.58% as a constructive setup going into the print. While year-over-year comps were negative last quarter—revenue down 3.87% and EPS down 8.02%—the combination of a stronger sequential base and near-term utilization gains underpins confidence in the quarter’s targets. In this framework, execution on delivery timing and continued discipline in operating costs become the key variables that can turn forecasts into realized outperformance.

Overall, institutional views skew positive, anchored by the expectation that McGrath RentCorp can meet or modestly exceed the quarter’s revenue and EPS outlook while sustaining margin quality through mix and operational discipline. If management’s commentary confirms improving utilization trends and backlog conversion within the quarter, the bullish narrative should hold, validating the Overweight/Buy stance that currently defines the majority opinion going into February 25, 2026 Post Market.