United Rentals Stock Up 80% Since The Election; Argus Downgrades On Valuation
United Rentals, Inc. (NYSE: URI) reported strong Q4 results. The company appears well positioned to “continue its multiyear earnings recovery,” Argus’s Stephen Biggar said in a report.
He downgraded the rating on the company from Buy to Hold, citing the strong runup in shares.
United Rentals shares have appreciated 80 percent since the November 8 election. Biggar commented, “While optimism about increased infrastructure spending under the Trump administration has driven the shares higher, we note that congressional approval of this spending is not assured, and that the impact of higher spending may be limited in 2017.”
Q4 Results
United Rentals reported Q4 2016 adjusted EPS at $2.67, up from $2.19 in the year-ago quarter and beating the consensus forecast by $0.43. Revenue came in at $1.52 billion, flat on a year-on-year basis.
2017 Prospects
Despite recent pressure on rental rates, the company’s core U.S. markets continue to have healthy business activity, Biggar stated. An IHS Markit forecast calls for 3-4 percent growth in the US rental industry in 2017 and 5 percent annual growth in the US construction sector in 2016-2019.
United Rentals could benefit in 2017 from “more favorable pricing, a modest increase in rental volume, continued growth in specialty operations, and a further decline in interest expense,” the analyst noted. He added that following a 1 percent revenue decline in 2016, the company could generate 2.8 percent revenue growth in 2017.
The EPS estimate for 2017 has been raised from $8.88 to $9.02.
Latest Ratings for URI
Feb 2017 | Argus Research | Downgrades | Buy | Hold |
Jan 2017 | Avondale Partners | Upgrades | Market Perform | Outperform |
Dec 2016 | UBS | Upgrades | Sell | Neutral |
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