Custom Truck One Source: The Infrastructure Spending Tailwind May Already Be Priced In

Custom Truck One Source (NYSE: CTOS) reports second quarter 2026 earnings after the close on Monday, August 3, 2026, with a conference call scheduled for Tuesday morning. The central question: can the specialty equipment provider sustain its dramatic turnaround momentum after posting its first quarterly beat in Q1 and raising full-year guidance? With analysts expecting $0.02 per share versus a $0.13 loss in the year-ago quarter, investors will scrutinize whether improved transmission and distribution fundamentals and operational improvements can drive the company toward profitability.

Part 1: Earnings Preview

Custom Truck One Source provides specialized heavy equipment solutions through two segments: Specialized Equipment Rental (SER) and Specialized Truck & Equipment Manufacturing & Sales (STEM), serving utility, telecom, rail, and other infrastructure markets. The company operates a rental fleet and manufactures custom trucks and equipment for mission-critical applications.

CTOS will report Q2 2026 results after the close on August 3, 2026. Analysts expect earnings of $0.02 per share on revenue of approximately $512.07 million. The company most recently reported Q1 2026 earnings of $-0.02 per share, beating estimates of $-0.05. The consensus estimate represents a dramatic 115.38% improvement versus the $-0.13 loss reported in Q2 2025, signaling expectations for a meaningful inflection in profitability.

Three key themes define this earnings story:

Transmission & Distribution Market Recovery: Management affirmed 2026 consolidated revenue guidance of $2.005–$2.12 billion and raised adjusted EBITDA to $415–$440 million, citing stronger T&D fundamentals driving higher utilization and improved pricing. The raise reflects management's confidence that utility infrastructure spending is accelerating, with rental fleet net OEC expected to grow mid-single digits and SER revenue targeted at $835–$870 million.

Operational Turnaround Execution: After posting its first quarterly beat in Q1 2026, investors will watch whether CTOS can sustain margin improvements and operational efficiencies. The company is targeting inventory reduction from roughly 7–7.5 months toward under 6 months, with plans to generate over $50 million in levered free cash flow for the year—a critical milestone for a business that has struggled with profitability.

Balance Sheet Deleveraging: With current net debt of $1.65 billion against LTM adjusted EBITDA exceeding $408 million, net leverage sits just over 4x. Management targets meaningful reduction below 4x by year-end and approximately 3x in 2027, with ABL availability of $257 million and roughly $190 million in additional potential capacity. Progress on deleveraging will be essential to investor confidence.

Analyst commentary ahead of the release emphasizes cautious optimism. The consensus has shifted from expecting continued losses to anticipating positive earnings, reflecting improved visibility into the T&D recovery and operational improvements. However, analysts note that STEM third-party growth of 3%–10% remains modest, with overall STEM sales including intersegment expected flat to slightly down, suggesting the recovery is still in early stages.

Part 2: Historical Earnings Performance

CTOS has demonstrated improving execution over the past four quarters, with a notable inflection in Q1 2026. The company reported $-0.02 in Q1 2026, beating estimates of $-0.05 by 60%—marking its first beat after three consecutive quarters of meeting or missing expectations.

Prior to that, Q4 2025 saw the company report $0.09, matching the consensus estimate exactly after Q3 2025 also came in line at $-0.03. The Q2 2025 quarter was particularly challenging, with CTOS reporting $-0.13 versus estimates of $-0.05, a 160% miss that reflected operational headwinds and weaker market conditions.

The pattern suggests CTOS has turned a corner operationally. After the significant Q2 2025 miss, the company has progressively improved its ability to meet or exceed expectations, culminating in the Q1 2026 beat. This trajectory supports management's raised guidance and suggests the operational improvements and T&D market recovery are gaining traction. Investors will watch closely to see if Q2 2026 can deliver another beat and confirm the turnaround is sustainable rather than a one-quarter anomaly.

Note: These figures reflect diluted GAAP earnings per share, reported before non-recurring items, and may differ from the non-GAAP figures used by some sources.

Part 2.1: Price Behavior Around Earnings

CTOS reports after market close, meaning Day 0 reflects anticipatory trading before results are released, while Day +1 captures the market's first full reaction to the actual numbers.

CTOS exhibits significant volatility around earnings, with an average absolute Day +1 move of 8.36% and an average Day +1 range of 12.10%. The most recent Q1 2026 report saw a modest 2.62% gain on Day +1, well below the historical average, suggesting the market took the beat in stride without excessive enthusiasm.

Historically, post-earnings moves have been dramatic and directional. The March 2025 report triggered a 20.15% surge on Day +1, while the August 2024 report saw a 12.66% decline. The pattern shows no consistent directional bias—four of the last eight reports saw Day +1 gains, four saw declines—but the magnitude of moves is consistently large, reflecting the stock's volatility and the market's sensitivity to operational execution.

The 4.88% average Day 0 move and 6.46% average Day 0 range indicate meaningful anticipatory trading, though the real action typically comes on Day +1 when investors digest the full results and guidance. Given the company's recent operational improvements and raised guidance, investors should prepare for another potentially large move, with direction likely determined by whether CTOS can beat estimates again and provide confident commentary on the T&D recovery.

Part 2.2: Options Market Expected Move

The options market is pricing an 8.41% expected move through the August 21 expiration, slightly above the 8.36% average historical Day +1 move but below the 12.10% average Day +1 range. This suggests options traders are anticipating volatility consistent with recent history, though not at the extreme levels seen in some prior quarters. The expected move range of $9.26 to $10.96 provides a clear framework for assessing whether the post-earnings reaction is within or outside normal bounds.

Part 3: What Analysts Are Saying

Analysts maintain a bullish stance on CTOS heading into earnings, with a consensus rating of 4.43 reflecting strong buy sentiment. The breakdown shows 5 Strong Buy ratings, 0 Moderate Buys, 2 Holds, and no Sell ratings among the 7 analysts covering the stock. Sentiment has remained unchanged over the past month, indicating stable conviction in the turnaround thesis.

The average price target of $11.50 implies 13.3% upside from the current price of $10.15, with a range from a low of $10.00 to a high of $13.00. The tight clustering of targets around the mean suggests analysts have converged on a similar valuation framework, likely based on the company's raised EBITDA guidance and improving operational metrics.

The strong buy-side tilt reflects analyst confidence that CTOS can execute on its deleveraging plan, sustain margin improvements, and capitalize on the T&D market recovery. However, the presence of two Hold ratings suggests some caution remains, likely tied to concerns about the modest STEM growth outlook and the company's still-elevated leverage. The unchanged sentiment indicates analysts are waiting for Q2 results to validate the Q1 beat and confirm the turnaround is durable before upgrading further.

Part 4: Technical Picture

CTOS enters earnings with mixed technical momentum after recent weakness. The Barchart Technical Opinion currently stands at 40% Buy, down sharply from 88% Buy one week ago and 96% Buy one month ago, signaling a rapid deterioration in near-term technical strength despite the longer-term uptrend remaining intact.

Timeframe Analysis:

• Short-term (Hold): Neutral signal indicates near-term momentum has stalled after the recent pullback from higher levels
• Medium-term (50% Buy): Moderate buy signal suggests the intermediate-term trend remains constructive despite short-term weakness
• Long-term (100% Buy): Strong buy signal confirms the stock remains in a solid longer-term uptrend, supported by the substantial gains over the past year

Trend Characteristics: The trend is characterized as Good strength but in its Weakest directional phase, suggesting the stock has pulled back from recent highs but retains underlying support from the longer-term uptrend—a setup that could see renewed momentum if earnings deliver positive surprises.

The stock is currently trading at $10.15, positioned below all near-term moving averages but above longer-term trend indicators. Specifically, CTOS trades below the 5-day ($10.17), 10-day ($10.37), 20-day ($10.31), and 50-day ($10.40) moving averages, indicating short-term weakness and consolidation. However, the stock remains above the 100-day ($9.11) and 200-day ($7.73) moving averages, confirming the longer-term uptrend is intact.

The technical setup heading into earnings is cautiously constructive. While the recent pullback and breakdown below short-term moving averages suggest near-term momentum has faded, the stock's position well above its 100-day and 200-day moving averages provides a cushion of support. The 50-day moving average at $10.40 represents immediate resistance, while the 100-day at $9.11 offers key support if the stock sells off post-earnings. Given the historical volatility around CTOS earnings and the current consolidation pattern, the technical picture suggests the stock is coiled for a significant move in either direction—with a beat and strong guidance likely to reclaim the 50-day and reignite the uptrend, while a miss could test the 100-day support zone.