Earnings beat and guidance update refocus attention on CTOS stock

Custom Truck One Source (CTOS) is back on investors radars after first quarter 2026 results, a higher adjusted EBITDA outlook and reaffirmed full year revenue guidance framed by strong rental and end market demand.

That earnings beat and guidance update came after a strong run, with a 30‑day share price return of 44.92% and year to date share price return of 64.66%, while the 1‑year total shareholder return of 127.38% contrasts with a 5‑year total shareholder loss.

If you are looking beyond equipment rentals and infrastructure exposure, this could be a good moment to scan for other power grid and electrification plays using the 36 power grid technology and infrastructure stocks.

With CTOS stock up sharply in recent months and trading around a 12% discount to one analyst price target yet above some intrinsic value estimates, investors may want to consider whether there is still an opportunity at the current price or whether the market is already reflecting anticipated growth.

Most Popular Narrative: 24.6% Overvalued

At a last close of $9.55 versus a narrative fair value of $7.67, the most followed storyline on Custom Truck One Source suggests the stock is priced ahead of that model, with the 11.38% discount rate and earnings roadmap doing most of the heavy lifting behind the gap.

Sustained and growing demand from electricity grid modernization and maintenance, fueled by increasing electricity usage and multi-year utility infrastructure upgrades, is driving recurring rental revenue and supporting long-term top-line growth.

Strategic and ongoing investments expanding the rental fleet and maintaining high utilization rates (above 75%) are increasing recurring revenue and providing margin stability, supporting consistent adjusted EBITDA growth and improved free cash flow generation.

Curious what kind of revenue path, margin lift and final earnings level need to line up so that a higher future earnings multiple still pencils out at today’s price? The full narrative lays out a detailed chain from grid spending and new product launches through to future profitability and valuation, and shows exactly how those assumptions combine into that $7.67 fair value mark.

Result: Fair Value of $7.67 (OVERVALUED)

However, investors still need to watch CTOS's relatively high net leverage and pressure on segment margins, which could weigh on earnings if demand or pricing becomes softer.

Another Angle on Valuation

The narrative fair value of $7.67 paints CTOS as 24.6% overvalued at $9.55, but the picture looks different when you look at the current P/S of 1.1x. That sits below both peers at 1.4x and the US Trade Distributors average at 1.2x, while matching the 1.1x fair ratio. This means the ratio is already where the model suggests the market could move toward. The question is whether the real risk lies in expectations in the narrative being too demanding, or in the market already pricing CTOS fairly on sales today.

Next Steps

With the story pointing to both opportunity and risk, this is a moment to move quickly and test the thesis against the data yourself. You can start with the 2 key rewards.

Looking for more investment ideas?

If you stop at CTOS, you could miss other opportunities that fit your style. Take a few minutes now to scan the market and upgrade your shortlist.

• Target companies with strong cash generation and quality fundamentals by running the 48 high quality undervalued stocks.
• Prioritise resilience and capital preservation by filtering for 70 resilient stocks with low risk scores.
• Hunt for lesser known opportunities with solid metrics using the screener containing 25 high quality undiscovered gems.

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.