I'm out, raising cash. Short term the trend is up, there is momentum behind the stock. But medium term I am not so sure. I think you might be able to get in at a lower level between May & October.
My feeling is that the stock will be up in the short term on the general strength of the overall stock market. However, a 20% decline from 2009 to 2010 in the first quarter is a pathetic number. Keep in mind that this includes the continuing liquidation of fleet and that the decline in free cash flow also includes fleet liquidation (someone correct me here if I'm wrong).
Taken all together, the numbers do not bode well for URI. A construction recovery is a ways off yet, inflationary pressures may be kicking in, their fleet is diminished, their debt is still large, and there are competitors with better balance sheets.
I gotta say, I think I agree! Losses worse, stimulus program a dud, black clouds on the financial horizon as far as the eye can see - will probably sell tomorrow if it doesn't collapse by then (I get up about 4pm EDT so too late today).
Still, the question should be posed - why in hell did the stock go UP so much?
In my opinion there is a risk of stock manipulation. The company does not have a clean history. Are you aware that there are former employees, ie. President (as I understand) who have gone to jail? There is always room for pumping up the stock so the insiders can make a killing. Just an opinion here
Free cash flow estimate of $200-225 million for the full year. Market cap of only $730 million.
Good luck with your short position.
P.S. All things rental (URI, RRR, HTZ, CAR, DTG) are up nicely today. I hope you're following the industry closely and not just trading on the "insight" you posted.
"Free cash flow was $99 million, compared with $129 million for the same period last year. "
Free cash flow down. Revenue down. Profit down. Highly dependent on expiring stimulus dollars. Why is it at a 52-week high? Tempted to add to my short position, but it's prudent to avoid investments behaving in ways that can't be understood.
The cash flow is nice, and it is true I have no special knowledge of the industry. However, it makes sense that depreciation would be a large part of the rentals business, so maybe cash flow isn't the fairest metric. At some point, they have to spend that cash on replacement equipment.
The debt is large. They lost more money, took in less revenue, in a period marked by billions of stimulus dollars now expiring....