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In the last reported quarter, United Rentals’ adjusted earnings missed the Zacks Consensus Estimate by 2.1%, but revenues beat the same by 4.7%, respectively. This largest equipment rental company’s first-quarter 2023 adjusted earnings and revenues grew 38.7% and 30.2% year over year, respectively.
Markedly, its earnings surpassed expectations in 33 out of the last 39 quarters. The company’s revenues topped the consensus mark in 22 out of the trailing 24 quarters.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has increased to $9.23 from $9.20 over the past 30 days. The estimated figure indicates 17.4% growth from the year-ago EPS of $7.86. The consensus mark for revenues is $3.43 billion, suggesting a 23.9% year-over-year improvement.
Factors to Note
United Rentals’ second-quarter performance is expected to have reflected sustained demand in its end markets and the strength of its core rental business. Higher pricing and improved activity level, backed by stronger demand in each of the end markets served in North America (industrial and other non-construction and commercial construction), are expected to have aided United Rentals’ second-quarter results.
Notably, federally funded infrastructure projects, industrial manufacturing, energy and power activities are expected to have benefited the company’s quarterly results. The company’s quarterly results are likely to have benefited from solid mega-project activity. URI’s solid exposure to blue-chip engineering & construction accounts and industry-leading market share is expected to have reflected in its quarterly performance. Furthermore, acquisitions are expected to have helped United Rentals to boost the top line in the quarter to be reported.
The company’s investment in the General Rental segment (wherein the primary growth drivers are non-residential construction and plant maintenance) also bodes well. Overall, industrial markets are expected to have aided the company’s performance.
Equipment Rentals revenues (which accounted for 86.9% of its total revenues in 2022) are expected to have registered growth in the to-be-reported quarter. We expect Equipment Rentals revenues to increase 19% to $2,928.8 million in the second quarter from a year ago.
Our model predicts, Rental Equipment sales to grow 86.6% to $306.1 million from the year-ago reported figure.
New Equipment sales suggest an increase of 10.4% year over year. The contractor supplies sales indicate 9.2% growth from the prior year. Service and other revenues suggest 10% growth on a year-over-year basis.
Overall, the company’s General Rentals revenues are expected to grow 23.7% to $2,508.3 million in the quarter from the year-ago period. On the other hand, the Specialty segment is expected to have registered 19.1% growth to $886 million in the second quarter from a year ago.
From the margin perspective, supply-chain disruptions and higher inflation might be causes of concern. The consolidated operating margin is expected to decline to 24.4% in the quarter from 25.8% a year ago.
We expected adjusted EBITDA for the quarter to grow 21.4% year over year to $1.59 billion. Adjusted EBITDA margin, however, is expected to decline 40 basis points to 46.9%.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for United Rentals for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: United Rentals has an Earnings ESP of -6.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: URI currently sports a Zacks Rank #1.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector which, according to our model, have the right combination of elements to post an earnings beat on their quarters to be reported.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Owens Corning (OC - Free Report) has an Earnings ESP of +1.11% and sports a Zacks Rank of 1.
OC’s earnings for the to-be-reported quarter are expected to decline 15.1%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 15.1%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +2.22% and carries a Zacks Rank of 3.
VMC is expected to register a 24.8% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 7.1%.
Image: Bigstock
Factors Setting the Tone for United Rentals (URI) Q2 Earnings
United Rentals, Inc. (URI - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, after market close.
In the last reported quarter, United Rentals’ adjusted earnings missed the Zacks Consensus Estimate by 2.1%, but revenues beat the same by 4.7%, respectively. This largest equipment rental company’s first-quarter 2023 adjusted earnings and revenues grew 38.7% and 30.2% year over year, respectively.
Markedly, its earnings surpassed expectations in 33 out of the last 39 quarters. The company’s revenues topped the consensus mark in 22 out of the trailing 24 quarters.
United Rentals, Inc. Price and EPS Surprise
United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has increased to $9.23 from $9.20 over the past 30 days. The estimated figure indicates 17.4% growth from the year-ago EPS of $7.86. The consensus mark for revenues is $3.43 billion, suggesting a 23.9% year-over-year improvement.
Factors to Note
United Rentals’ second-quarter performance is expected to have reflected sustained demand in its end markets and the strength of its core rental business. Higher pricing and improved activity level, backed by stronger demand in each of the end markets served in North America (industrial and other non-construction and commercial construction), are expected to have aided United Rentals’ second-quarter results.
Notably, federally funded infrastructure projects, industrial manufacturing, energy and power activities are expected to have benefited the company’s quarterly results. The company’s quarterly results are likely to have benefited from solid mega-project activity. URI’s solid exposure to blue-chip engineering & construction accounts and industry-leading market share is expected to have reflected in its quarterly performance. Furthermore, acquisitions are expected to have helped United Rentals to boost the top line in the quarter to be reported.
The company’s investment in the General Rental segment (wherein the primary growth drivers are non-residential construction and plant maintenance) also bodes well. Overall, industrial markets are expected to have aided the company’s performance.
Equipment Rentals revenues (which accounted for 86.9% of its total revenues in 2022) are expected to have registered growth in the to-be-reported quarter. We expect Equipment Rentals revenues to increase 19% to $2,928.8 million in the second quarter from a year ago.
Our model predicts, Rental Equipment sales to grow 86.6% to $306.1 million from the year-ago reported figure.
New Equipment sales suggest an increase of 10.4% year over year. The contractor supplies sales indicate 9.2% growth from the prior year. Service and other revenues suggest 10% growth on a year-over-year basis.
Overall, the company’s General Rentals revenues are expected to grow 23.7% to $2,508.3 million in the quarter from the year-ago period. On the other hand, the Specialty segment is expected to have registered 19.1% growth to $886 million in the second quarter from a year ago.
From the margin perspective, supply-chain disruptions and higher inflation might be causes of concern. The consolidated operating margin is expected to decline to 24.4% in the quarter from 25.8% a year ago.
We expected adjusted EBITDA for the quarter to grow 21.4% year over year to $1.59 billion. Adjusted EBITDA margin, however, is expected to decline 40 basis points to 46.9%.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for United Rentals for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: United Rentals has an Earnings ESP of -6.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: URI currently sports a Zacks Rank #1.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector which, according to our model, have the right combination of elements to post an earnings beat on their quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Owens Corning (OC - Free Report) has an Earnings ESP of +1.11% and sports a Zacks Rank of 1.
OC’s earnings for the to-be-reported quarter are expected to decline 15.1%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 15.1%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +2.22% and carries a Zacks Rank of 3.
VMC is expected to register a 24.8% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 7.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.