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Home » Custom Truck One Source, Inc. (CTOS): Stock Analysis

Custom Truck One Source, Inc. (CTOS): Stock Analysis

What is Custom Truck One Source, Inc.?

Country & Stock exchangeUnited States/New York Stock Exchange (NYSE)
Ticker symbol & Stock typeCTOS, CTOS.WS/common stock and warrants
Industry Areas of operationRental & Leasing Services/USA and Canada
Business model & Business Merchandise Category“one-stop-shop” equipment dealership/specialty equipment
SeasonalityYes
BrandsCustom Truck One Source, Load King
Number of stores & E-commerce platforms38[1]/www.customtruck.com
CompetitorsMcGrath RentCorp (MGRC), Upbound Group (UPBD), PROG (PRG), Aaron’s (AAN), Katapult (KPLT), FlexShopper (FPAY), United Rentals (URI), AerCap (AER), Air Lease (AL), Goodyear Tire & Rubber (GT)[2]
Custom Truck One Source, Inc.’s (previously known as “Nesco Holdings, Inc.”) one-stop-shop business model provides clients with equipment rental, new and used equipment sales, and aftermarket parts and services. The company provides equipment for maintaining, repairing, upgrading, and installing critical infrastructure assets like distribution and transmission electric lines, telecommunications networks, rail systems, lighting and signage, etc. Plus, the company rents, produces, sells, and services a broad range of new and used equipment, including bucket trucks, digger derricks, dump trucks, cranes, service trucks, and heavy-haul trailers.
The company’s revenue comes from three sources: rental revenue, equipment sales, parts sales and services. In 2023, equipment sales accounted for 67.2% of revenue, making it a major source of income.

How did Custom Truck One Source, Inc. perform over the past 7 years?

Below is the data accumulated over the past seven years in the form of bar charts, divided into three main sections: the income statement, balance sheet, and cash flow statement, each of which has subsections with related KPIs.

How do I interpret the financial performance of Custom Truck One Source, Inc. over the past 7 years?

Revenueis constantly increasing
Gross Profit Marginhigher than 20%, but lower than the desired 40%
SG&A expenses as % of gross profitit exceeds the desired 30%
Depreciation as % of gross profitmuch higher than the desired 6–8%, but at least it’s decreasing over time
Operating Ratiomore or less staying on the same level
Interest Expense as % of operating incomemuch higher than the desired 6–7%
Operating Margininconsistent, while it should increase steadily
Net Marginfar below the desired 20%
EPSshows a consistent upward trend
Cash and cash equivalentsamounts are low and most likely gained through borrowing money
Inventoriesare on the rise with the revenue, as it ideally should be
Current & non-current liabilitiessince non-current liabilities exceed current liabilities, the company is not at risk from a sudden increase in interest rates
Current ratiorecently higher than 1, which also adds stability
PP&Econstantly increasing, while it should decrease over time
ROA and ROEwere negative or unculculable most of the time due to both shareholders’ equity and income being negative, but at least they’re now positive and increasing.
D/E ratioexceeds the desired 0.80
Retained Earningsnone
Free Cash Flowis negative most of the time due to high CAPEX, while it should be positive and steadily increase
CAPEX/Net income ratioexceeds the desired 25%
Dividendsnone
Stock buybacks & dividends as a % of FCFit shows that the company somewhat benefits shareholders, but the current trend is unsustainable
In the left column of the table is a set of indicators to pay attention to when analyzing businesses. In the right column is the interpretation of each of those indicators relative to the standards described in the book “Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage” by Marry Buffett and David Clark.

Does CTOS have a competitive advantage over its peers?

No. Despite rising earnings and somewhat stable profit margins (excluding net profit margin), other KPIs show that the company is lacking in many aspects. It doesn’t pay dividends to investors, there are no retained earnings, and low levels of cash and negative free cash flows put the company at risk and cannot be sustained for long.

Is Custom Truck One Source, Inc.’s stock worth buying?

Despite the company’s lack of a competitive advantage, its track record of financial performance spans only 7 years. On the charts above, we’ve seen that some KPIs, such as net margin, EPS, and other indicators, show upward trends, so if the company performs well in the next few years, investors might consider it a potential investment. In the web story below, you can see the values of the company’s MRQ and TTM KPIs:


Article Sources

The data displayed on the charts was collected from the following reports:

1.Custom Truck One Source, Inc.’s website “customtruck.com, https://www.customtruck.com/.”

2.GOOGLE SERP SECTION. “https://www.google.com/search?q=custom+truck+one+source+competitors&sca_esv=82d30ddfe6a51a7e&rlz=1C1CHBF_esAR1102AR1102&sxsrf=ADLYWIIpPZuqlo-sET8qcCMb9pu4rY_BHQ%3A1717899342992&ei=ThBlZtmUPMHe1sQPqIKT6Ao&oq=Custom+Truck+One+Source&gs_lp=Egxnd3Mtd2l6LXNlcnAiF0N1c3RvbSBUcnVjayBPbmUgU291cmNlKgIIADIKECMYgAQYJxiKBTIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABEi-EFCmCFimCHABeAGQAQCYAXqgAXqqAQMwLjG4AQHIAQD4AQL4AQGYAgKgAoMBwgIKEAAYsAMY1gQYR5gDAIgGAZAGBJIHAzEuMaAHnwc&sclient=gws-wiz-serp.”

The location of Custom Truck One Source, Inc. is in Tampa, Florida.