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United Rentals (URI) Stock Surges 92% in a Year: Here's Why
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United Rentals, Inc.’s (URI - Free Report) stock surged 91.8% in the past year compared with the Zacks Building Products - Miscellaneous industry’s 52% growth and S&P 500 index’s 26.2% rise.
The company’s focus on rental business, solid infrastructure and non-residential sectors demand, and acquisitions are making it more attractive among its peers.
This Zacks Rank #3 (Hold) company’s earnings estimates for 2024 showcase a growth rate of 7.3% from the year-ago period on a 6.5% revenue improvement. Its earnings topped the Zacks Consensus Estimate in all the trailing four quarters, with the average surprise being 6%. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of further outperformance in the near term.
Image Source: Zacks Investment Research
Let’s discuss the contributing factors in detail.
Robust Rental Revenue Growth: Backed by the company’s multi-year tailwinds in infrastructure, manufacturing, and energy and power, along with strong customer demand, United Rentals has been witnessing widespread growth in rental revenues. In first-quarter 2024, equipment rentals contributed 84% to the company’s total revenues. In the same quarter, rental revenues rose 6.9% to $2.93 billion year over year. The company witnessed robust demand across geographies, verticals, and customer segments.
Solid Demand Across the End Markets: The company witnessed robust demand across geographies, verticals, and customer segments. Industrial manufacturing and power drove substantial growth in industrial end markets. In construction markets, both infrastructure and non-residential sectors exhibited solid year-over-year growth as customers initiated diverse projects, including power generation, data centers, automotive and infrastructure.
United Rentals’ extensive and diverse fleet allows it to serve large customers that require a wide range of equipment. The company’s rental fleet is the largest and most comprehensive in the industry.
High Infrastructural Investment: United Rentals is capitalizing on robust global shifts toward infrastructure modernization, energy transition, and heightened national security concerns. Particularly, United Rentals is poised to sustain its upward trajectory in the foreseeable future, given its solutions closely align with both U.S. governmental policies and prevailing industry dynamics.
The pressing need to revamp the nation's deteriorating infrastructure, coupled with funding for new climate-resilient and broadband initiatives, bode well for United Rentals. The company anticipates a varied portfolio of federal projects spanning road and bridge renovations, water management, harbor and port enhancements, and upgrades to the power grid, all of which are anticipated to fuel growth throughout 2024.
Acquisitions to Expand Business: United Rentals is expanding geographic borders and product portfolio through acquisitions and joint ventures. On Mar 15, 2024, the company acquired Yak Access, LLC, Yak Mat, LLC, and New South Access & Environmental Solutions, LLC (collectively, “Yak”) from Platinum Equity for around $1.1 billion in cash. This acquisition enhances URI's position in the North American matting industry with a fleet of approximately 600,000 mats, catering primarily to customers in the utility and midstream sectors. The move is expected to bolster URI's capabilities in construction and maintenance operations.
The Zacks Consensus Estimate for Armstrong World Industries’ earnings per share (EPS) for 2024 has increased to $5.89 from $5.74 over the past 30 days.
Frontdoor, Inc. (FTDR - Free Report) currently flaunts a Zacks Rank of 1. FTDR delivered a trailing four-quarter earnings surprise of 286.8%, on average.
The Zacks Consensus Estimate for Frontdoor’s EPS for 2024 has increased to $2.52 from $2.36 over the past 30 days.
Advanced Drainage Systems, Inc. (WMS - Free Report) currently carries a Zacks Rank of 2. WMS delivered a trailing four-quarter earnings surprise of a whopping 30.5%, on average.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 EPS has increased to $6.75 from $6.70 over the past 30 days.
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United Rentals (URI) Stock Surges 92% in a Year: Here's Why
United Rentals, Inc.’s (URI - Free Report) stock surged 91.8% in the past year compared with the Zacks Building Products - Miscellaneous industry’s 52% growth and S&P 500 index’s 26.2% rise.
The company’s focus on rental business, solid infrastructure and non-residential sectors demand, and acquisitions are making it more attractive among its peers.
This Zacks Rank #3 (Hold) company’s earnings estimates for 2024 showcase a growth rate of 7.3% from the year-ago period on a 6.5% revenue improvement. Its earnings topped the Zacks Consensus Estimate in all the trailing four quarters, with the average surprise being 6%. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of further outperformance in the near term.
Image Source: Zacks Investment Research
Let’s discuss the contributing factors in detail.
Robust Rental Revenue Growth: Backed by the company’s multi-year tailwinds in infrastructure, manufacturing, and energy and power, along with strong customer demand, United Rentals has been witnessing widespread growth in rental revenues. In first-quarter 2024, equipment rentals contributed 84% to the company’s total revenues. In the same quarter, rental revenues rose 6.9% to $2.93 billion year over year. The company witnessed robust demand across geographies, verticals, and customer segments.
Solid Demand Across the End Markets: The company witnessed robust demand across geographies, verticals, and customer segments. Industrial manufacturing and power drove substantial growth in industrial end markets. In construction markets, both infrastructure and non-residential sectors exhibited solid year-over-year growth as customers initiated diverse projects, including power generation, data centers, automotive and infrastructure.
United Rentals’ extensive and diverse fleet allows it to serve large customers that require a wide range of equipment. The company’s rental fleet is the largest and most comprehensive in the industry.
High Infrastructural Investment: United Rentals is capitalizing on robust global shifts toward infrastructure modernization, energy transition, and heightened national security concerns. Particularly, United Rentals is poised to sustain its upward trajectory in the foreseeable future, given its solutions closely align with both U.S. governmental policies and prevailing industry dynamics.
The pressing need to revamp the nation's deteriorating infrastructure, coupled with funding for new climate-resilient and broadband initiatives, bode well for United Rentals. The company anticipates a varied portfolio of federal projects spanning road and bridge renovations, water management, harbor and port enhancements, and upgrades to the power grid, all of which are anticipated to fuel growth throughout 2024.
Acquisitions to Expand Business: United Rentals is expanding geographic borders and product portfolio through acquisitions and joint ventures. On Mar 15, 2024, the company acquired Yak Access, LLC, Yak Mat, LLC, and New South Access & Environmental Solutions, LLC (collectively, “Yak”) from Platinum Equity for around $1.1 billion in cash. This acquisition enhances URI's position in the North American matting industry with a fleet of approximately 600,000 mats, catering primarily to customers in the utility and midstream sectors. The move is expected to bolster URI's capabilities in construction and maintenance operations.
Key Picks
Some better-ranked stocks in the same space are:
Armstrong World Industries, Inc. (AWI - Free Report) currently has a Zacks Rank of 2 (Buy). AWI delivered a trailing four-quarter earnings surprise of 15.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Armstrong World Industries’ earnings per share (EPS) for 2024 has increased to $5.89 from $5.74 over the past 30 days.
Frontdoor, Inc. (FTDR - Free Report) currently flaunts a Zacks Rank of 1. FTDR delivered a trailing four-quarter earnings surprise of 286.8%, on average.
The Zacks Consensus Estimate for Frontdoor’s EPS for 2024 has increased to $2.52 from $2.36 over the past 30 days.
Advanced Drainage Systems, Inc. (WMS - Free Report) currently carries a Zacks Rank of 2. WMS delivered a trailing four-quarter earnings surprise of a whopping 30.5%, on average.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 EPS has increased to $6.75 from $6.70 over the past 30 days.