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United Rentals Inc (URI): A Deep Dive into Its Financial Metrics and Competitive Strengths
United Rentals Inc (NYSE:URI) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $434.04, United Rentals Inc has witnessed a daily loss of 3.12%, marked against a three-month change of 4.89%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that United Rentals Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
United Rentals Inc's GF Score components are as follows:
Financial strength rank: 5/10
Profitability rank: 10/10
Growth rank: 10/10
GF Value rank: 5/10
Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and a slightly lower financial strength rank, GuruFocus assigned United Rentals Inc the GF Score of 95 out of 100, which signals the highest outperformance potential.
Introduction to United Rentals Inc
United Rentals Inc, with a market cap of $29.64 billion and sales of $13.19 billion, is the world's largest equipment rental company. It principally operates in the United States and Canada, where it commands approximately 17% share in a highly fragmented market. It serves three end markets: general industrial, commercial construction, and residential construction. United Rentals has grown organically and through hundreds of acquisitions since it went public in 1997, its catalog (fleet size of $19.6 billion) now includes a range of specialty equipment and other items that can be rented for indefinitely long periods. The company's operating margin stands at 27.51%.
Profitability Rank Breakdown
The Profitability Rank shows United Rentals Inc's impressive standing among its peers in generating profit. United Rentals Inc's Operating Margin has increased (10.70%) over the past five years, as shown by the following data: 2018: 25.08; 2019: 23.22; 2020: 21.30; 2021: 23.49; 2022: 27.76. Furthermore, United Rentals Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 41.80; 2019: 39.25; 2020: 37.32; 2021: 39.66; 2022: 42.91. This trend underscores the company's growing proficiency in transforming revenue into profit.
The Piotroski F-Score confirms United Rentals Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. United Rentals Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, United Rentals Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 10.9%, which outperforms better than 69.49% of 980 companies in the Business Services industry. Moreover, United Rentals Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 12.5, and the rate over the past five years is 15.2. This trend accentuates the company's continued capability to drive growth.
Conclusion
United Rentals Inc's strong financial strength, profitability, and growth metrics highlight the firm's unparalleled position for potential outperformance. The GuruFocus Score Rating underscores this potential, making United Rentals Inc a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
