Key Takeaways
- McGrath RentCorp shares jumped 9% on Monday on news it will join the S&P SmallCap 600 on Nov. 4.
- Index funds must buy by then, and that gain can fade once they’re done.
- Loar Holdings joins the same index, and Glaukos moves up to the S&P MidCap 400.
- McGrath cut its revenue outlook last week, and it’s spending more on its fleet.
McGrath RentCorp (MGRC) stock jumped 9% on Monday, Nov. 2. S&P Dow Jones Indices said after Friday’s close that McGrath will join the S&P SmallCap 600 before Wednesday’s open.
It takes the seat of Glaukos (GKOS), which moves up to the S&P MidCap 400. Loar Holdings (LOAR) joins the small-cap index the same morning, and it also rose 9% on Monday.
The index funds have until Wednesday
S&P SmallCap 600 index funds have to own McGrath by Wednesday’s open, whatever the price. Once they have their shares, that buyer is gone, so nothing forced is left to hold the gain up.
Loar gets the same buying, but its second-quarter net sales rose 39%, and it trades at about 47x forward earnings after Monday’s jump. It reports third-quarter results before the open on Thursday, Nov. 5, and if it holds its gain and McGrath doesn’t, the business is the likelier reason.
Glaukos goes the other way: S&P 600 funds sell it, and MidCap 400 funds buy it. Its third-quarter net sales rose 58%, but can that growth keep up with 183x forward earnings?
McGrath’s own quarter was mixed
On Oct. 28, McGrath reported third-quarter revenue up 7% and adjusted EBITDA up 10%.
Management held its 2026 adjusted EBITDA midpoint at $369 million and cut its revenue range to $945 million to $960 million on lower modular sales.
Analysts expect EBITDA to keep growing:
That’s mid-single-digit growth in 2027 and 2028 from a small group of analysts, and little in the report looks likely to move it.
From a discount to about average
Before Monday’s jump, McGrath traded below its own history:
It was at 18x on Friday, under its five-year average of 19x. At Monday’s close it’s about 19.6x, slightly above that average but still well short of its 25x peak in early 2024.
TIKR tracks 3 analysts on McGrath RentCorp. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on McGrath RentCorp, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See McGrath RentCorp’s Analyst Ratings
McGrath is spending more to grow
Over the last four quarters, capex took about 90% of cash from operations, up from just over a third the year before:
After Monday’s jump, McGrath looks fairly priced, and the business has to earn anything more. The fourth-quarter report early next year will show whether the bigger fleet is speeding up EBITDA growth.
So what is McGrath RentCorp stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
