Head-To-Head Review: McGrath RentCorp (MGRC) vs. Aircastle Limited (AYR)
McGrath RentCorp (NASDAQ: MGRC) and Aircastle Limited (NYSE:AYR) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitabiliy, dividends, analyst recommendations and valuation.
Volatility & Risk
McGrath RentCorp has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, Aircastle Limited has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for McGrath RentCorp and Aircastle Limited, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
McGrath RentCorp currently has a consensus price target of $40.00, suggesting a potential upside of 17.51%. Aircastle Limited has a consensus price target of $24.22, suggesting a potential upside of 11.73%. Given McGrath RentCorp’s stronger consensus rating and higher probable upside, research analysts plainly believe McGrath RentCorp is more favorable than Aircastle Limited.
Valuation & Earnings
This table compares McGrath RentCorp and Aircastle Limited’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|McGrath RentCorp||$425.22 million||1.92||$89.51 million||$1.65||20.63|
|Aircastle Limited||$788.43 million||2.16||$157.43 million||$2.00||10.84|
Aircastle Limited has higher revenue and earnings than McGrath RentCorp. Aircastle Limited is trading at a lower price-to-earnings ratio than McGrath RentCorp, indicating that it is currently the more affordable of the two stocks.
This table compares McGrath RentCorp and Aircastle Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
McGrath RentCorp pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Aircastle Limited pays an annual dividend of $1.04 per share and has a dividend yield of 4.8%. McGrath RentCorp pays out 63.0% of its earnings in the form of a dividend. Aircastle Limited pays out 52.0% 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 increased its dividend for 15 consecutive years and Aircastle Limited has increased its dividend for 6 consecutive years. Aircastle Limited is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
82.5% of McGrath RentCorp shares are owned by institutional investors. Comparatively, 63.4% of Aircastle Limited shares are owned by institutional investors. 4.6% of McGrath RentCorp shares are owned by insiders. Comparatively, 2.7% of Aircastle Limited shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
McGrath RentCorp Company Profile
McGrath RentCorp is a diversified business-to-business rental company. The Company operates through four business segments: modular building and portable storage segment (Mobile Modular); electronic test equipment segment (TRS-RenTelco); a subsidiary providing containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (Adler Tanks), and a subsidiary classroom manufacturing business selling modular buildings used primarily as classrooms in California (Enviroplex). The Mobile Modular business segment includes Mobile Modular Portable Storage division. As of December 31, 2016, the Company’s TRS-RenTelco rented and sold electronic test equipment nationally and internationally from three facilities located in Grapevine, Texas (the Dallas facility), Dollard-des-Ormeaux, Canada (the Montreal facility) and Bangalore, Karnataka, India (the Bangalore facility). Adler Tanks purchases tanks and boxes from various manufacturers located throughout the country.
Aircastle Limited Company Profile
Aircastle Limited is a holding company. The Company, through its subsidiaries, acquires, leases and sells commercial jet aircrafts to airlines. The Company is engaged in financing and managing commercial flight equipment. The Company manages its aircrafts in the United States, Ireland and Singapore. As of December 31, 2016, the Company owned and managed on behalf of its joint ventures 206 aircrafts leased to 71 lessees located in 36 countries. The Company originates acquisitions and sales through relationships with airlines, other aircraft lessors, financial institutions and brokers, as well as other sources. As of February 7, 2017, the Company had lease commitments or letters of intent to lease or sell 16 aircrafts. The Company’s aircraft portfolio includes passenger wide-body, passenger narrow-body and freighter aircrafts. The Company’s portfolio spans across various regions, such as the Middle East and Africa, South America, North America, Asia and Pacific, and Europe.
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