Analyzing BlueLinx (NYSE:BXC) and McGrath RentCorp (NASDAQ:MGRC)

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

Institutional & Insider Ownership

92.0% of McGrath RentCorp shares are held by institutional investors. Comparatively, 90.8% of BlueLinx shares are held by institutional investors. 1.4% of McGrath RentCorp shares are held by insiders. Comparatively, 3.6% of BlueLinx shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares McGrath RentCorp and BlueLinx”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McGrath RentCorp	$944.23 million	2.87	$156.31 million	$6.21	17.83
BlueLinx	$2.95 billion	0.20	$220,000.00	($0.25)	-306.68

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

Volatility and Risk

McGrath RentCorp has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, BlueLinx has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Profitability

This table compares McGrath RentCorp and BlueLinx’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%
BlueLinx	-0.06%	0.13%	0.05%

Analyst Ratings

This is a breakdown of recent ratings and price targets for McGrath RentCorp and BlueLinx, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McGrath RentCorp	0	2	2	0	2.50
BlueLinx	1	1	1	0	2.00

McGrath RentCorp currently has a consensus target price of $141.50, indicating a potential upside of 27.77%. BlueLinx has a consensus target price of $83.50, indicating a potential upside of 8.91%. Given McGrath RentCorp’s stronger consensus rating and higher probable upside, research analysts clearly believe McGrath RentCorp is more favorable than BlueLinx.

Summary

McGrath RentCorp beats BlueLinx on 11 of the 14 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 BlueLinx

BlueLinx Holdings Inc., together with its subsidiaries, engages in the distribution of residential and commercial building products in the United States. It distributes specialty products, including engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products; and structural products, such as lumber, plywood, oriented strand boards, rebars and remesh, as well as other wood products that are used for structural support in construction projects. It also provides various value-added services and solutions to customers and suppliers. The company serves national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers, and industrial manufacturers. BlueLinx Holdings Inc. was incorporated in 2004 and is headquartered in Marietta, Georgia.