Custom Truck One Source, Inc. (CTOS) stock intrinsic value fair value estimate & owner earnings analysis

Custom Truck One Source rents and sells specialty trucks and equipment (truck-mounted aerial lifts, cranes, digger derricks, dump trucks and similar units) used by crews in infrastructure work, with a large share of the rental fleet serving electric utilities and telecom, across the United States and Canada. In 2025 revenue was $1,944 million: $506 million from renting out its fleet of more than 10,400 units (average age about 2.9 years), $1,304 million from selling new and used equipment, and $133 million from parts and service. Platinum Equity owns the majority of the shares and has the power to control the company's affairs and policies, so minority shareholders' interests may differ from its own. How we measured earnings. We start with cash from operations, remove the swings from inventory, receivables and payables, subtract stock compensation, and subtract the cost of keeping the rental fleet at its current size. Fleet purchases are large ($457 million in 2025), but the company also sells used rental units every year ($206 million of proceeds in 2025), so we count purchases net of those sales, plus $32 million of non-rental spending. We then treat the growth in the fleet's original cost ($141 million in 2025) as discretionary growth spending and only the remainder as upkeep. Interest is already inside the cash flow, so debt is not subtracted a second time. Per share, this gives $0.63 (2022), $0.35 (2023), $0.15 (2024) and $0.25 (2025). Earnings before 2022 belong to a different, much smaller business: the merger that created the company closed in April 2021, so we start after that year. We anchor on the median of 2023 to 2025, $0.25 per share, and leave out 2022 because it was earned with a lighter interest burden (interest expense of $88.9 million in 2022 against $104.9 million in 2025). The 2025 figure was 72% above 2024; our base case assumes no growth in year one, which is below that. The main risk is debt. At the end of 2025 the company owed $1,661 million: $920 million of 5.5% second-lien notes due April 15, 2029, and $698 million on a revolving credit line that comes due August 2029 (or earlier if the notes are not refinanced). It also carries $657 million of floor plan financing on inventory. Cash interest paid in 2025 was $155 million. The company reported a net loss in 2024 and 2025. Base case, $3.39 per share. Earnings stay at $0.25 per share through 2028. The notes are refinanced in 2029 at about 7% instead of 5.5%, costing roughly $0.06 per share a year, so earnings settle near $0.19 and continue at that level. We assume no growth. Fleet expansion, higher rental use and new markets are not credited: they depend on customer demand that has not yet occurred. Rental revenue did rise 14% in 2025 and revenue rose 9.8% in the first half of 2026, but we treat that as a recovery of normal levels rather than a proven repeatable growth engine. Bear case, $0.77 per share. Earnings fall back to the 2024 level of $0.15 through 2028. The notes are refinanced at about 8.5%, costing roughly $0.12 per share a year, leaving about $0.03 per share afterward. Truck pricing has been under pressure, and the company disclosed continued pricing pressure on truck sales in 2025. With this much debt, the shares are worth very little if refinancing goes badly. Bull case, $5.31 per share. Earnings return to the 2023 level of $0.35 through 2028 and, after refinancing at about 6.5%, settle near $0.31. This is a level the business has already reached. Supporting signs are that net income was positive in the first half of 2026 ($6.3 million, against a $46.2 million loss a year earlier) and that fleet purchases were lower ($192 million against $225 million). What would make this wrong. If the company can refinance at the current 5.5% coupon, or if the fleet additions it made in 2024 and 2025 raise rental income beyond what we credit, value is higher. If the fleet needs more replacement spending than we count as upkeep, or equipment sales weaken, value is lower. The split of fleet spending between growth and upkeep is our own judgement. We also did not count the $52.5 million received in 2024 from selling and leasing back eight properties as earnings.