Financial Analysis: McGrath RentCorp (NASDAQ:MGRC) and SiteOne Landscape Supply (NYSE:SITE)

SiteOne Landscape Supply (NYSE:SITE) and McGrath RentCorp (NASDAQ:MGRC) are both mid-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Risk & Volatility

SiteOne Landscape Supply has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, McGrath RentCorp has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Insider & Institutional Ownership

92.0% of McGrath RentCorp shares are owned by institutional investors. 2.1% of SiteOne Landscape Supply shares are owned by insiders. Comparatively, 1.4% of McGrath RentCorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares SiteOne Landscape Supply and McGrath RentCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SiteOne Landscape Supply	3.41%	9.76%	4.83%
McGrath RentCorp	16.38%	12.44%	6.38%

Earnings & Valuation

This table compares SiteOne Landscape Supply and McGrath RentCorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SiteOne Landscape Supply	$4.70 billion	0.96	$155.40 million	$3.65	28.31
McGrath RentCorp	$944.23 million	3.03	$156.31 million	$6.21	18.87

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

Analyst Ratings

This is a summary of current ratings and price targets for SiteOne Landscape Supply and McGrath RentCorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SiteOne Landscape Supply	0	7	5	0	2.42
McGrath RentCorp	0	2	1	0	2.33

SiteOne Landscape Supply currently has a consensus target price of $121.00, suggesting a potential upside of 17.11%. McGrath RentCorp has a consensus target price of $140.00, suggesting a potential upside of 19.49%. Given McGrath RentCorp’s higher possible upside, analysts clearly believe McGrath RentCorp is more favorable than SiteOne Landscape Supply.

Summary

McGrath RentCorp beats SiteOne Landscape Supply on 8 of the 14 factors compared between the two stocks.

About SiteOne Landscape Supply

SiteOne Landscape Supply, Inc., together with its subsidiaries, engages in the wholesale distribution of landscape supplies in the United States and Canada. The company provides irrigation products, including controllers, valves, sprinkler heads, irrigation pipes, micro irrigation, and drip products; fertilizer, grass seed, and ice melt products; control products, such as herbicides, fungicides, rodenticides, and other pesticides; landscape accessories that include mulches, soil amendments, drainage pipes, tools, and sods; nursery goods, which consist of deciduous and evergreen shrubs, ornamental, shade, evergreen trees, field grown and container-grown nursery stock, roses, perennials, annuals, bulbs, and plant species and cultivars; hardscapes, such as pavers, natural stones, blocks, and other durable materials; and outdoor lighting products that include lighting fixtures, LED lamps, wires, transformers, and accessories. It also offers consultative services consisting of assistance with irrigation project take-offs, commercial project planning, generation of sales leads, business operations, and product support services, as well as a series of technical and business management seminars; and distributes branded products of third parties. The company offers its products under the LESCO, SiteOne Green Tech, and Pro-Trade brand names. It markets its products primarily to residential and commercial landscape professionals who specializes in the design, installation, and maintenance of lawns, gardens, golf courses, and other outdoor spaces through branch network and direct distribution. SiteOne Landscape Supply, Inc. was incorporated in 2013 and is headquartered in Roswell, Georgia.

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.