WillScot Corp: Buy, Sell, or Hold?

WillScot Mobile Mini Holdings Corp. (WSC) is a leading turnkey modular space and portable storage solutions provider that leases office space and storage solutions for commercial and industrial and construction purposes. The company’s modular space monthly rental rates are increasing due to the rising demand for leasing, delivery, and installation services with the expectation of coronavirus vaccines hitting the market next year.

The pandemic has forced companies to deploy measures to ensure health safety and distancing, including proper sanitization of the workplace. WSC is well-positioned for the surge in demand as newly constructed office buildings that provide these features are expected to be preferred over traditional workplace setup. The company’s innovative business model and its financial strength allowed its stock to gain 14.7% year-to-date. This impressive performance combined with several other factors has helped WSC earn a “Strong Buy” rating in our proprietary rating system.

Here’s how our proprietary POWR Ratings system evaluates WSC:

Trade Grade: A

WSC is currently trading above its 50-day and 200-day moving averages of $18.65 and $15.13, respectively, indicating that the stock is in an uptrend. The stock gained 15.6%, over the past three months, reflecting a solid short-term bullishness.

WSC’s revenue increased 55.6% year-to-date to $417.32 million in the third quarter ended September 2020. Adjusted EBITDA grew 87.2% from the year-ago value to $163.56 million, while cash flow from operating activities rose 57.3% from the prior-year quarter to $61.37 million.

Earlier this year, WSC announced the pricing of a $500 million senior secured notes offering. The company intends to use the net proceeds from the offering to redeem $441 million outstanding senior notes, meet working capital expenses, and fund its other corporate requirements.

The company has recently merged with Mobile Mini, Inc. to create a stronger and more diverse company. This will help WSC expand its business operations, thereby increasing its revenues and EPS for the months to come.

Buy & Hold Grade: A

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, WSC is pretty well-positioned. The stock is currently trading just 4.8% below its 52-week high of $22.26, which it hit on November 18th.

This can be attributed to the company’s long-term improvements in the new order and delivery volumes and its ability to adapt commercially as activity levels change across end markets.

Peer Grade: A

WSC is currently ranked #4 out of 44 stocks in the Real Estate Services industry. Other popular stocks in this industry are Maui Land and Pineapple Company, Inc. (MLP), Colliers International Group, Inc. (CIGI), and Crown Castle International Corp. (CCI)

While CCI and CIGI beat WSC by gaining 17.6% and 15.9% year-to-date, respectively, MLP returned 9.2% over this period. WSC is expected to witness a higher demand for its storage solutions, compared to its peers, due to its innovative temporary space and functional solutions, allowing consumers to meet their urgent as well as long term needs.

Industry Rank: B

The Real Estate Services industry is ranked #72 out of the 123 StockNews.com industries. The companies in this manage commercial property and non-residential properties for owners and work as agents in the buying, leasing, and selling of commercial real estate.

Since April, the real estate market has experienced a steep and steady recovery. With offices reopening across the country with positive vaccine news and a recovering economy, the demand for commercial real estate should revive pretty quickly.

Overall POWR Rating: A (Strong Buy)

WSC is rated “Strong Buy” due to its impressive financials, short-and-long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

WSC is well-positioned to soar in the upcoming months despite gaining 14.7% year-to-date, as the demand for temporary office space is expected to accelerate over the upcoming months.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for WSC. It has an average broker rating of 1.18, indicating favorable analyst sentiment. Out of 11 Wall Street analysts that rated the stock, 9 rated it a “Strong Buy.” The consensus EPS estimate of $0.20 for the current quarter ending December 2020 indicates a 122.2% improvement year-over-year. The consensus revenue estimate of $424.66 million for the current quarter indicates a 52.7% increase from the same period last year.

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WSC shares were trading at $21.32 per share on Monday afternoon, up to $0.12 (+0.57%). Year-to-date, WSC has gained 15.31%, versus a 13.57% rise in the benchmark S&P 500 index during the same period.

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.

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