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On Wednesday, Stifel analysts maintained their Hold rating on Custom Truck One Source (NYSE:CTOS) shares, with a consistent price target of $5.00. The company’s fourth-quarter results fell short of analysts’ revenue and adjusted EBITDA expectations. Reported revenue was $521 million, compared to the anticipated $541 million, and adjusted EBITDA reached $102 million versus the forecasted $105 million. According to InvestingPro data, the company, currently valued at $1.14 billion, operates with a significant debt burden, with a debt-to-equity ratio of 3.04x.
The Equipment Rental Solutions (ERS) and Truck & Equipment Sales (TES) segments both yielded lower revenues than projected. However, rental utilization saw a year-over-year improvement, climbing from 77.6% to 78.9%, with the average fleet on rent also increasing by 4%.
Looking ahead to 2025, Custom Truck One Source provided guidance that surpassed revenue expectations, primarily driven by the TES segment, but the projected adjusted EBITDA was considered to align with predictions. The company experienced a significant year-over-year increase in TES orders during the fourth quarter, jumping 35% to $281 million, which annualizes to $1.12 billion. This growth supports the 2025 revenue outlook for TES, which has a midpoint of $1.19 billion and compares favorably to the average order trends over the past six quarters, which stood at approximately $715 million annualized. Based on InvestingPro Fair Value analysis, the stock appears fairly valued, though three analysts have recently revised their earnings expectations downward for the upcoming period.
Custom Truck One Source also noted that while there was a seasonally normal decline in utilization during December, the current rate remains above 78%. The improved rental trends and order patterns are seen as consistent with industry commentary and guidance from major public Transportation and Distribution Engineering and Construction (T&D E&C) companies.
In other recent news, Custom Truck One Source Inc. reported a notable earnings per share (EPS) of $0.12 for the fourth quarter of 2024, significantly surpassing the forecasted $0.04. However, the company’s revenue fell short of expectations, coming in at $521 million against a forecast of $543.32 million. The company’s Transmission Equipment Segment achieved record annual sales of $1.1 billion, highlighting its strong performance. Custom Truck One Source continues to invest in its rental fleet and expanded operations with a new branch in Portland, Oregon. The company also executed a sale-leaseback transaction on eight properties, generating over $52 million to reduce debt. Analysts from firms like Robert W. Baird and Oppenheimer have shown interest in the company’s strategic initiatives and financial management. The company is targeting a net leverage below 4x by the end of 2025, aiming for further financial discipline and growth.
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