Critical Analysis: McGrath RentCorp (NASDAQ:MGRC) and Alta Equipment Group (NYSE:ALTG)

McGrath RentCorp (NASDAQ:MGRC) and Alta Equipment Group (NYSE:ALTG) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Volatility & Risk

McGrath RentCorp has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, Alta Equipment Group has a beta of 1.71, suggesting that its share price is 71% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for McGrath RentCorp and Alta Equipment Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McGrath RentCorp	0	2	1	0	2.33
Alta Equipment Group	1	2	1	0	2.00

McGrath RentCorp currently has a consensus target price of $140.00, indicating a potential upside of 25.04%. Alta Equipment Group has a consensus target price of $8.75, indicating a potential upside of 50.60%. Given Alta Equipment Group’s higher probable upside, analysts plainly believe Alta Equipment Group is more favorable than McGrath RentCorp.

Insider and Institutional Ownership

92.0% of McGrath RentCorp shares are held by institutional investors. Comparatively, 73.6% of Alta Equipment Group shares are held by institutional investors. 1.4% of McGrath RentCorp shares are held by company insiders. Comparatively, 20.5% of Alta Equipment Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares McGrath RentCorp and Alta Equipment Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McGrath RentCorp	$944.23 million	2.90	$156.31 million	$6.21	18.03
Alta Equipment Group	$1.84 billion	0.10	-$80.30 million	($2.57)	-2.26

McGrath RentCorp has higher earnings, but lower revenue than Alta Equipment Group. Alta Equipment Group is trading at a lower price-to-earnings ratio than McGrath RentCorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares McGrath RentCorp and Alta Equipment Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
McGrath RentCorp	16.38%	12.44%	6.38%
Alta Equipment Group	-4.42%	-3,253.61%	-5.92%

Summary

McGrath RentCorp beats Alta Equipment Group on 9 of the 13 factors compared between the two stocks.

About McGrath RentCorp

McGrath RentCorp operates as a business to business rental company in the United States and internationally. It rents and sells relocatable modular buildings, portable storage containers, and electronic test equipment. The company operates through four segments: Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex. The Mobile Modular segment rents and sells modular buildings designed for use as classrooms, temporary offices adjacent to existing facilities, sales offices, construction field offices, restroom buildings, health care clinics, child care facilities, office spaces, and various other purposes. The TRS-RenTelco segment rents and sells general purpose electronic test equipment, such as oscilloscopes, amplifiers, analyzers, signal source, and power source test equipment primarily to aerospace, defense, electronics, industrial, research, and semiconductor industries. It also provides communications test equipment, including network and transmission test equipment for various fiber, copper, and wireless networks to the manufacturers of communications equipment and products, electrical and communications installation contractors, field technicians, and service providers. The Portable Storage segment offers steel containers to provide a temporary storage solution. The Enviroplex segment manufactures and sells portable classrooms directly to public school districts and other educational institutions in California. The company was incorporated in 1979 and is based in Livermore, California.

About Alta Equipment Group

Alta Equipment Group Inc. owns and operates integrated equipment dealership platforms in the United States. It operates through three segments: Material Handling, Construction Equipment, and Master Distribution. The company operates a branch network that sells, rents, and provides parts and service support for various categories of specialized equipment, including lift trucks and other material handling equipment, heavy and compact earthmoving equipment, crushing and screening equipment, environmental processing equipment, cranes and aerial work platforms, paving and asphalt equipment, and other construction equipment and related products. It also offers repair and maintenance services for its equipment. In addition, the company designs and builds warehouses; provides automated equipment installation and system integration solutions; and distributes environmental processing equipment. It serves various manufacturing, food and beverage, automotive, municipal/government, education, pharmaceutical and medical, wholesale and retail distribution, construction, agriculture, road building, mining, recycling, and waste management sectors. Alta Equipment Group Inc. was founded in 1984 and is headquartered in Livonia, Michigan.