Reliance (NYSE:RS) vs. McGrath RentCorp (NASDAQ:MGRC) Head-To-Head Review

McGrath RentCorp (NASDAQ:MGRC) and Reliance (NYSE:RS) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, dividends, earnings, profitability and institutional ownership.

Dividends

McGrath RentCorp pays an annual dividend of $1.98 per share and has a dividend yield of 1.8%. Reliance pays an annual dividend of $5.00 per share and has a dividend yield of 1.3%. McGrath RentCorp pays out 31.9% of its earnings in the form of a dividend. Reliance pays out 29.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. McGrath RentCorp has raised its dividend for 33 consecutive years and Reliance has raised its dividend for 15 consecutive years. McGrath RentCorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

McGrath RentCorp has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, Reliance has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Insider and Institutional Ownership

92.0% of McGrath RentCorp shares are owned by institutional investors. Comparatively, 79.3% of Reliance shares are owned by institutional investors. 1.4% of McGrath RentCorp shares are owned by insiders. Comparatively, 0.4% of Reliance shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares McGrath RentCorp and Reliance’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%
Reliance	5.65%	12.51%	8.47%

Earnings & Valuation

This table compares McGrath RentCorp and Reliance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McGrath RentCorp	$944.23 million	2.86	$156.31 million	$6.21	17.78
Reliance	$14.29 billion	1.41	$739.40 million	$17.20	22.90

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

Analyst Ratings

This is a summary of current ratings and target prices for McGrath RentCorp and Reliance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McGrath RentCorp	0	2	2	0	2.50
Reliance	1	5	2	1	2.33

McGrath RentCorp currently has a consensus price target of $141.50, indicating a potential upside of 28.17%. Reliance has a consensus price target of $379.83, indicating a potential downside of 3.57%. Given McGrath RentCorp’s stronger consensus rating and higher probable upside, analysts plainly believe McGrath RentCorp is more favorable than Reliance.

Summary

Reliance beats McGrath RentCorp on 9 of the 17 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 Reliance

Reliance, Inc. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was formerly known as Reliance Steel & Aluminum Co. and changed its name to Reliance, Inc. in February 2024. Reliance, Inc. was founded in 1939 and is based in Scottsdale, Arizona.