WillScot Mobile Mini’s stock price has taken a beating over the past six months, shedding 28.6% of its value and falling to $27.29 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is there a buying opportunity in WillScot Mobile Mini, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is WillScot Mobile Mini Not Exciting?
Even though the stock has become cheaper, we're swiping left on WillScot Mobile Mini for now. Here are three reasons why we avoid WSC and a stock we'd rather own.
1. Lackluster Revenue Growth
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. WillScot Mobile Mini’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.4% over the last two years was well below its five-year trend. 
2. EPS Took a Dip Over the Last Two Years
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Sadly for WillScot Mobile Mini, its EPS declined by 3.4% annually over the last two years while its revenue grew by 2.4%. This tells us the company became less profitable on a per-share basis as it expanded.
3. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, WillScot Mobile Mini’s margin dropped by 5 percentage points over the last five years. Continued declines could signal it is in the middle of an investment cycle. WillScot Mobile Mini’s free cash flow margin for the trailing 12 months was 18.9%.
Final Judgment
WillScot Mobile Mini isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 16.4× forward P/E (or $27.29 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d suggest looking at the most entrenched endpoint security platform on the market.
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