Is McGrath RentCorp overvalued or undervalued?

As of 24 July 2025, McGrath RentCorp's valuation grade has moved from fair to attractive, indicating a positive shift in its market perception. The company appears to be undervalued, with a P/E ratio of 20, which is favorable compared to peers like Mr. Cooper Group, Inc. at 29.22 and Ryder System, Inc. at 14.15. Additionally, McGrath RentCorp's EV to EBITDA stands at 9.78, while the industry average is not provided, suggesting a competitive edge in operational efficiency. The PEG ratio of 2.14 also highlights potential growth relative to its price.
In terms of peer comparison, McGrath RentCorp's P/E ratio is lower than that of Mr. Cooper Group, Inc., indicating it may be undervalued relative to its earnings potential. Furthermore, while the stock has underperformed against the S&P 500 over the 3-year and 10-year periods, it has outperformed over the 1-year period, returning 24.73% compared to the S&P 500's 17.14%. This performance, coupled with its attractive valuation metrics, supports the conclusion that McGrath RentCorp is currently undervalued.