Custom Truck One Source (CTOS): Losses Narrow 29.9% Annually, Propelling Optimism Ahead of Profitability

Custom Truck One Source (CTOS) trimmed its annual losses at a rate of 29.9% per year over the past five years and is forecast to swing to profitability within the next three years, with earnings projected to grow at a striking 84.88% annually. At the same time, the company’s revenue is expected to climb at a more modest 4.9% per year, trailing the broader US market’s forecast of 10.1%. As CTOS continues to close the gap to profitability and boasts attractive valuation multiples, the reward signals are currently outweighing the risks in investors’ eyes.

See our full analysis for Custom Truck One Source.

Next up, we will see how these headline-grabbing results compare with the broader narratives that investors and analysts have been discussing, and where expectations might be shifting.

See what the community is saying about Custom Truck One Source

Margins Under Pressure, Mixed Signals for Bulls

• Gross margins in Custom Truck One Source's TES and ERS segments are showing stress, with recent declines driven by a greater share of lower-margin rental asset sales on the books.
• Consensus narrative notes that, despite margin compression, strong recurring rental revenue and legislative incentives for utility infrastructure upgrades are keeping cash flow robust and providing a buffer as gross profit faces headwinds.
  • Margin challenges, especially from segment mix shifts, stand in contrast to analysts' bullish stance on margin expansion from negative 1.9% to 1.2% within three years.
  • Rental revenue strength and backlog growth, supported by a 45% year-over-year jump in local customer orders, reinforce bulls’ confidence in improved profitability even if segment trends remain volatile.
• The balanced view suggests that watching margin and backlog trends will be key to validating the top-line growth story as profitability approaches.
• See how the company’s margin outlook and segment mix could shape analysts’ consensus narrative for CTOS in the coming years. 📊 Read the full Custom Truck One Source Consensus Narrative.

Leverage Still High, Risk Remains

• With net leverage at 4.66x, well above management’s goal of below 3x by fiscal 2026, Custom Truck One Source remains exposed if interest expense rises or revenue growth stalls.
• Critics highlight in the consensus narrative that sustained elevated leverage, margin pressures, and regulatory uncertainty create vulnerability for net income and valuation if market conditions worsen.
  • Ongoing environmental regulations and potential tariff shifts could raise compliance costs, hitting EBITDA and net earnings more than bulls may expect.
  • A decline in TES segment backlog, spotlighted by a quarter-over-quarter drop, challenges optimism about forward demand and revenue visibility, adding to investor caution.

Valuation Discount Versus Industry

• CTOS trades at a Price-to-Sales ratio of 0.7x, below both its peer group average of 0.8x and the US Trade Distributors industry at 1.2x, making it appear attractively valued within the segment.
• According to analysts' consensus narrative, this valuation gap could rerate if the company delivers on projected margin improvements and free cash flow targets, though currently the share price ($6.02) is above the DCF fair value of $4.49, suggesting the risk-reward balance is finely poised.
  • Analyst consensus expects a future PE ratio of 72.9x based on 2028 earnings estimates, compared to the industry’s 23.3x, highlighting tension between short-term relative value and longer-term growth assumptions.
  • For consensus optimism to be justified, revenue must climb to a projected $2.3 billion and net leverage needs meaningful progress, or else valuation support may erode.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Custom Truck One Source on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Custom Truck One Source.

See What Else Is Out There

Despite impressive growth projections, Custom Truck One Source still faces margin pressures and elevated debt levels. These factors could threaten profitability if conditions shift.

Want companies better equipped for resilience? Check out solid balance sheet and fundamentals stocks screener (1979 results) to discover businesses with stronger balance sheets and less financial risk than CTOS right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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