United Rentals Attains 52-Week High
Shares of United Rentals, Inc. (URI) crafted a new 52-week high of $94.83 on March 20, up from its previous high of $93.32 on March 19.
The stock closed at $94.76 at the end of trading yesterday, with a solid one-year return of about 77.4% and year-to-date return of about 21.6%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 1603K.
This Greenwich, CT-based equipment rental and leasing services provider has a market cap of $8.8 billion and long-term expected earnings growth of 18.9%. The company has outperformed the Zacks Consensus Estimate in each of the four trailing quarters with an average surprise of 8.81%.
United Rentals’ Strengths
Shares of United Rentals have been rising, following its fourth-quarter 2013 results on Jan 22. The company reported a 25% year-over-year increase in its adjusted earnings to $1.59 per share. The reported figure beat the Zacks Consensus Estimate of $1.45 per share as well.
Total revenue improved 7% year over year to $1.338 billion in the quarter. The year-over-year rise was mainly due to growth in both equipment rentals (up 9.4%) and sales of new equipment (up 3%), partly offset by a decline in rental equipment sales (down 5%). Revenues beat the Zacks Consensus Estimate of $1.331 billion.
United Rentals will benefit from the implementation of growth strategies, higher rental rates, free cash flow generation, returning cash to shareholders and integrating acquisitions. Notably, the company will continue to focus on reducing cycle time for renting equipment, improving accuracy, service quality and efficiency and controlling costs, which will lead to an increase in gross margin.
On March 9, United Rentals agreed to acquire National Pump for $780 million. The deal marks United Rentals' venture into the pump rental sector, which is witnessing a rising demand from energy and petrochemical companies that are capitalizing on the booming shale gas market in the U.S. The deal is expected to be accretive to United Rentals’ free cash flow and earnings per share in 2014.
The company revised its financial outlook after the announcement. United Rentals now expects 2014 revenues in the range of $5.45 billion to $5.65 billion and adjusted 2014 earnings before interest, taxes, depreciation and amortization (:EBITDA) between $2.55 billion and $2.65 billion.
Additionally, United Rentals intends to complete its $500 million share-buyback program by April 2015. The company is also poised to benefit from a rebound in non-residential construction.
United Rentals currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some other stocks worth considering in the sector include Gibraltar Industries, Inc. (ROCK), USG Corporation (USG) and Wolseley plc (WOSYY). While Gibraltar sports a Zacks Rank #1 (Strong Buy), USG Corporation and Wolseley have a Zacks Rank #2 (Buy).
Read the Full Research Report on ROCK
Read the Full Research Report on URI
Read the Full Research Report on USG
Read the Full Research Report on WOSYY
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