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Are Investors Undervaluing United Rentals (URI) Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is United Rentals (URI). URI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.09. This compares to its industry's average Forward P/E of 10.77. Over the past 52 weeks, URI's Forward P/E has been as high as 9.93 and as low as 4.87, with a median of 6.53.

Investors will also notice that URI has a PEG ratio of 0.34. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. URI's industry currently sports an average PEG of 0.88. Over the past 52 weeks, URI's PEG has been as high as 0.55 and as low as 0.27, with a median of 0.37.

Finally, investors will want to recognize that URI has a P/CF ratio of 3.51. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.22. Over the past year, URI's P/CF has been as high as 4.80 and as low as 2.43, with a median of 3.65.

These are only a few of the key metrics included in United Rentals's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, URI looks like an impressive value stock at the moment.


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