Stock of the Day

November 7, 2019

United Rentals (URI)

$1,043.73
-$28.09 (-2.6%)
Market Cap: $67.15B

About United Rentals

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals and Specialty. The General Rentals segment rents general construction and industrial equipment includes backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools for construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. The specialty segment rents specialty construction products, including trench safety equipment consists of trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and heating, ventilating, and air conditioning equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment; fluid solutions equipment for fluid containment, transfer, and treatment; and mobile storage equipment and modular office space. This segment serves construction companies involved in infrastructure projects, and municipalities and industrial companies. It also sells aerial lifts, reach forklifts, telehandlers, compressors, and generators; construction consumables, tools, small equipment, and safety supplies; and parts for equipment that is owned by its customers, as well as provides repair and maintenance services. The company sells used equipment through its sales force, brokers, website, at auctions, and directly to manufacturers. The company operates in the United States, Canada, Europe, Australia, and New Zealand. United Rentals, Inc. was incorporated in 1997 and is headquartered in Stamford, Connecticut.

United Rentals Bull Case

Here are some ways that investors could benefit from investing in United Rentals, Inc.:

  • The company has demonstrated strong revenue growth, with a year-over-year increase of over 7%, indicating robust demand for its rental services.
  • United Rentals, Inc. has a high return on equity, showcasing its efficiency in generating profits from shareholders' equity, which is currently at 30.56%.
  • The current stock price is around $1,024, reflecting a solid market position and investor confidence in the company's future performance.
  • With a net margin of 15.32%, the company is effectively managing its costs and maximizing profitability, which is attractive for potential investors.
  • The recent quarterly dividend of $1.97 per share, with a yield of 0.7%, provides a steady income stream for investors, supported by a reasonable payout ratio of 20.10%.

United Rentals Bear Case

Investors should be bearish about investing in United Rentals, Inc. for these reasons:

  • The company recently missed earnings expectations, reporting $9.71 EPS compared to the consensus estimate of $11.47, which may raise concerns about its short-term performance.
  • With a price-to-earnings ratio of 27.37, the stock may be considered overvalued compared to its earnings, which could deter value-focused investors.
  • The debt-to-equity ratio of 1.37 indicates a relatively high level of debt, which could pose risks in a rising interest rate environment or economic downturn.
  • Market volatility, as indicated by a beta of 1.79, suggests that the stock may experience larger price fluctuations compared to the overall market, which could be a concern for risk-averse investors.
  • Despite recent revenue growth, the company faces competition in the equipment rental industry, which could impact its market share and profitability in the future.
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