WillScot Holdings Corp (WSC) stock intrinsic value fair value estimate & owner earnings analysis

WillScot rents and sells modular offices, classrooms and job-site buildings, and portable storage containers, in the United States, Canada and Mexico, serving construction contractors and other customers including schools and public-sector users. About 94% of 2025 revenue of $2,281 million came from the United States. Leasing is the largest revenue line, and the fleet is owned by the company. Leases run about 42 months on average (excluding seasonal storage units), and the lease portfolio turns over roughly every three years, which gives the earnings some stability and regular chances to reset pricing. The business took its current shape when it combined with Mobile Mini in 2020, so we judge it from 2021 onward. How we measure earnings. We start from operating cash flow, then remove the swings in receivables, payables and customer deposits, subtract stock-based pay as a real cost, and subtract the cost of keeping the rental fleet and facilities in working order (purchases of rental equipment and property, net of what the company receives from selling used units). Interest is already paid before this figure, so debt of $3.6 billion at year-end 2025 is reflected in the earnings and is not deducted again. On this basis, per-share earnings were about $1.66 in 2021, $1.87 in 2022, $3.28 in 2023, $1.66 in 2024 and $2.47 in 2025. Two years need explaining. 2024 is depressed by $225.7 million of cash paid for a $180 million fee to end the proposed merger with McGrath RentCorp and related deal costs. That is a one-time item, so we leave 2024 out of our estimate of normal earnings. 2023 looks strong because a $91.8 million working-capital use (mostly a build in receivables) is added back in our method and because net fleet and property spending was lower that year ($185 million, versus $414 million in 2022 and $233 million in 2024). Using the four remaining years, the middle result is about $432 million a year, or about $2.38 per share on roughly 181.8 million diluted shares. That is our starting level for all three cases. Non-cash charges are not a cost in this method. In 2025 that includes $301.9 million of accelerated depreciation tied to the Network Optimization Plan, under which WillScot will exit about 665 acres (108 branch and drop lot locations, roughly 25% of leased acreage) over four years. That charge produced the reported 2025 net loss of $53.0 million but not a cash cost. Growth check. Owner earnings rose 42% in 2025 as reported ($450 million versus $316 million), but that is a distortion from the 2024 merger payments. Against the 2024 figure with those payments added back (about $542 million), 2025 was about 17% lower. Our base case assumes no growth from our starting level of about $432 million, which is about 4% below the 2025 actual, so it does not require any reversal of the recent decline. What is happening in the business. Revenue fell 4.8% in 2025. Average units on rent fell 11.3%, which the company attributes to three years of weaker non-residential construction starts under higher interest rates. Rates moved the other way: average monthly rent rose 4.9% on modular space and 7.5% on storage in 2025. Revenue also absorbed $63.5 million of receivable write-offs. Adjusted EBITDA fell 8.7%. The first half of 2026 looks steadier: revenue of $1,160.8 million versus $1,148.6 million a year earlier, and second-quarter revenue up about 3.9%. Purchases of rental equipment rose to $224.0 million in the half from $157.8 million. We do not lift our starting level on this, because two quarters of a small improvement does not change the normal level, and we do not credit any recovery in construction activity. Base case ($26.2 per share). Owner earnings stay at about $432 million a year for ten years, then fade in a straight line to zero over the following twenty years. We credit no growth. Rate increases are real, but they have been offset by falling units on rent, and expansion of the fleet or new products such as climate-controlled containers and clearspan structures is not something we can count as secured. We credit continued earnings because the fleet is kept up with the maintenance spending already deducted, because leases average about 42 months, and because owner earnings have been positive in every year since 2021. We fade the later years because nothing in the filings tells us how long the business holds this earning power once the current fleet is replaced. Bear case ($13.4 per share). Units on rent keep falling as they did in 2025, and owner earnings settle at $300 million a year, below every year since 2021, including 2024 as reported ($316 million). That level is held for five years and then fades to zero over fifteen years. Leverage makes this case worse than an unlevered business would suffer: $3.6 billion of debt, including notes due 2030 at 6.625%, notes due 2031 at 7.375% and an asset-based credit facility, is serviced ahead of shareholders, and that interest is already inside our earnings. The 2025 restructuring, which exits a quarter of leased acreage, also shows the company is shrinking its footprint rather than growing it. Bull case ($30.9 per share). Starting from the 2025 actual of about $450 million, the company keeps raising rents about 3% a year for five years, which is below the 4.9% and 7.5% increases achieved in 2025, and earnings then hold flat through year ten and fade to zero over the next twenty years. This is the outcome if pricing continues while unit counts stop falling, which the first half of 2026 modestly supports. It does not assume a construction rebound. What we left out. We did not credit acquisitions. WillScot has bought businesses every year since 2021 (for example a $115.6 million purchase of a regional provider of climate-controlled containers and trailers in 2025), but that spending comes out of cash we are already valuing, and we cannot see a return on it in the numbers. We also gave no credit for share repurchases, which reduced diluted shares from 232.8 million in 2021 to 182.4 million in 2025, because our per-share values already use today's share count. What would make this wrong. If the unit decline reverses and the fleet grows without needing much more spending, earnings would exceed our base case. If units on rent keep falling faster than rents rise, or refinancing raises interest costs, earnings could fall to our bear level. One item we could not fully reconcile: the quarterly report shows higher first-half 2026 fleet purchases, and we cannot tell from the interim data how much is growth versus replacement, so we did not change our estimate of normal earnings. Margin-of-safety price. The margin-of-safety price is about $14 per share, roughly equal to our bear case and about 47% below the base value, because the company is heavily indebted and its rental demand follows construction activity.