RSC Holdings Inc.RRR

Morningstar Rating

Stock Research and Analysis

by Joung Park

RSC Holdings operates in the asset-intensive equipment rental business, which features numerous competitors offering a pure commodity product. Although RSC currently claims certain advantages over its peers in customer service and operational efficiency, Read more

Bulls Say

Although equipment rental is a pure commodity business, RSC has been able to differentiate itself through superior customer service and a well-maintained fleet.

Construction firms have increasingly been choosing to lease equipment from rental companies such as RSC rather than owning the equipment themselves.

Equipment rental companies such as RSC tend to exhibit countercyclical cash flows, as they defer equipment purchases--their biggest source of cash outlays--during downturns and buy equipment during boom times. Read more

Bears Say

RSC's high debt, as well as near-term weaknesses in the construction industry, will limit the firm's ability to fund store expansions for some time.

A tight credit environment may raise rates on RSC's asset-backed loans, which the company needs to continually replenish its equipment fleet.

Nonresidential and industrial construction customers, which constitute 95% of RSC's sales, are set to experience stiff head winds in the near future. Read more

Strategy

RSC seeks to drive profitability in the commodified equipment rental market through its diverse, well-maintained equipment fleet and superior customer service. The firm leverages its scale to be one Read more

Management

Erik Olsson was appointed as CEO in 2006 after having served as CFO and COO since 2001. We regard his 2008 compensation of $1.4 million--of which almost half came in the form of stock options--as being reasonable. Because private-equity firms Ripplewood, Read more

Profile

RSC Holdings is the third-largest equipment rental company in North America, catering mainly to nonresidential and industrial construction companies. Its core equipment Read more

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