United Rentals (URI): Zacks Rank Buy

Zacks

United Rentals, Inc. (URI) has gained 55% so far this year, thanks to solid quarterly performances like last month's third-quarter report. In fact, this Zacks #1 Rank (Strong Buy) rental & leasing services company has surpassed the Zacks Consensus Estimate for five straight quarters, amassing an average surprise of 171% over the past 4. Given these factors, URI seems to be an attractive possibility for growth-seeking investors.

Driving Catalysts

On October 16, the company reported adjusted earnings per share of $1.35 for the third quarter, which was roughly 21.6% higher than the Zacks Consensus Estimate of $1.11.

Revenue surged 71% year over year to $1,219 million. Rental revenue of $1,051 million was up 74% and contributed roughly 86%.

Earnings Estimates on the Rise

The Zacks Consensus Estimate for 2012 is $3.53 per share, which is up more than 9% from 2 months ago and reflects year-over-year growth of 89%. The Zacks Consensus Estimate for 2013 is at $4.78, an advance of more than 3% in 60 days and suggesting improvement of 35.4% from the previous year.

Valuation

United Rentals, Inc. is currently trading at a price-to-earnings (P/E) ratio of 11.3, compared with the peer group average of 29.8. On a P/S basis, shares trade at 1.0x, versus the peer group average of 0.9x. The company offers an attractive ROE of 34.7% much higher than the peer group average of 7.1%.

United Rentals, Inc. is based in Greenwich, Connecticut, and was incorporated in 1997. The largest among the rental companies in the world, it operates primarily through its North American subsidiary. It has as many as 848 rental locations in 48 states and 10 Canadian provinces. It currently has a market capitalization of approximately $3.69 billion.


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