WSC

We rate WillScot Holdings Corp (WSC) as a Reduce with a composite score of 49.3/100 at a current price of $23.67. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (71th percentile) and momentum (49th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (27/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

WillScot Holdings Corp holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.3/100 places it at rank #2118 in our full 7,333-stock universe. At $3.8B in market capitalization, WillScot Holdings Corp is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -6% combined with momentum at the 49th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 52% (-7.8pp vs sector) narrow to operating margins of 14% (+11.0pp vs sector) and net margins of 2.9%, yielding a gross-to-net conversion rate of 6%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $23.67, WillScot Holdings Corp appears undervalued relative to its fundamentals. Our value factor score of 71/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 65.0x (a 174% premium to the sector median of 23.7x), EV/EBITDA of 9.8x (near the sector median), P/B of 4.8x, P/S of 1.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Very High uncertainty rating to WillScot Holdings Corp. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 1.68), significant leverage (579% debt-to-equity), elevated valuation multiple (P/E 65.0x) that leaves limited margin for error. The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.68); significant leverage (579% debt-to-equity); elevated valuation multiple (P/E 65.0x) that leaves limited margin for error; the combination of leverage (579% D/E) and thin margins (2.9% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 49th percentile and quality factor at the 48th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 52% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate WillScot Holdings Corp's capital allocation as Poor. Key concerns include elevated leverage (579% D/E), weak asset returns (ROA 1.1%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — WillScot Holdings Corp significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, WillScot Holdings Corp receives a Reduce rating with a composite score of 49.3/100 (rank #2118 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis does not support a constructive view on WillScot Holdings Corp at this time. The combination of limited competitive advantages, very high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.