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In the last reported quarter, its adjusted earnings and revenues beat the Zacks Consensus Estimate by 9.6% and 2.1%, respectively. Also, on a year-over-year basis, the top and bottom lines grew 6.1% and 15.1%, respectively.
The company’s earnings surpassed estimates in the trailing four quarters, the average surprise being 6%.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter adjusted earnings has increased to $10.48 per share from $10.46 over the past seven days. The projected figure indicates a 6.1% increase from the year-ago quarter’s earnings of $9.88 per share.
The consensus estimate for revenues is pegged at $3.77 billion, indicating growth of 6.2% from the prior-year quarter’s level.
Factors at Play
Revenues
The top-line of United Rentals is expected to have gained year over year on the back of solid demand across its end markets, especially for its Equipment Rentals business, the strategic acquisition of Yak and opportunities regarding larger projects. These accretive factors are likely to have aided the performance of URI’s two reportable segments, General Rentals (which contributed 73.1% to first-quarter 2024 total revenues) and Specialty (which contributed 26.9% to first-quarter total revenues).
Segment-wise, our model predicts second-quarter revenues for General Rentals and Specialty to increase year over year by 4.9% to $2.78 billion and 8% to $973.3 million, respectively.
The Equipment Rentals business — which accounted for 84% of first-quarter total revenues — is likely to have witnessed strong demand trend across the segments on the back of increased fleet productivity and average OEC. Apart from Equipment Rentals, other revenue sources include sales of rental equipment, new equipment, contractor supplies and service and other revenues.
For the second quarter, we expect revenues from Equipment Rentals to increase 6.2% year over year to $3.17 billion. The revenues for sales of rental equipment, contractor supplies sales, and service and other revenues are expected to increase 6.2%, 3.4%, and 4.8%, respectively, from the year-ago quarter. On the other hand, we anticipate sales of new equipment revenues to decline year over year by 17.9%.
The Yak acquisition is likely to have enhanced United Rentals’ position in the North American matting industry and boosted the Specialty segment's performance. Its multi-year tailwinds in infrastructure, manufacturing, and energy and power are encouraging. Besides this, the company’s efficient use of its competitive advantages and effective implementation of its strategies, including generating strong free cash flow and rewarding shareholders, are likely to have boosted its performance in the quarter.
Earnings & Margins
The bottom line of United Rentals is expected to have fared well in the second quarter given the significant leverage from the increased top line, decreases in certain discretionary expenses, including travel and entertainment, and cost-effective performance. Yet, increases in the cost of revenues and interest expenses are likely to have partially offset the tailwinds.
We expect adjusted EBITDA to grow 2.4% year over year to $1.74 billion but adjusted EBITDA margin to decline 150 bps. Also, the gross margin is expected to contract 100 bps to 39.1% year over year.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for United Rentals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
Earnings ESP: URI has an Earnings ESP of -1.37%. You can uncover the best stocks they’re reported with our Earnings ESP Filter.
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 in their second-quarter results.
Aspen Aerogels, Inc. (ASPN - Free Report) currently has an Earnings ESP of +23.53% and a Zacks Rank of 1.
ASPN’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 68.2%. Earnings for the second quarter of 2024 are expected to increase a whopping 122.7% year over year.
EMCOR Group, Inc. (EME - Free Report) currently has an Earnings ESP of +4.76% and a Zacks Rank of 3.
EME’s earnings for the second quarter are expected to increase 24.8%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 32%.
Dycom Industries, Inc. (DY - Free Report) currently has an Earnings ESP of +4.43% and a Zacks Rank of 2.
DY’s earnings for the second quarter are expected to increase 7.4%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 30.2%.
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Factors Setting the Tone for United Rentals' (URI) Q2 Earnings
United Rentals, Inc. (URI - Free Report) is scheduled to report its second-quarter 2024 results on Jul 24, after market close.
In the last reported quarter, its adjusted earnings and revenues beat the Zacks Consensus Estimate by 9.6% and 2.1%, respectively. Also, on a year-over-year basis, the top and bottom lines grew 6.1% and 15.1%, respectively.
The company’s earnings surpassed estimates in the trailing four quarters, the average surprise being 6%.
Trend in Estimate Revision
The Zacks Consensus Estimate for second-quarter adjusted earnings has increased to $10.48 per share from $10.46 over the past seven days. The projected figure indicates a 6.1% increase from the year-ago quarter’s earnings of $9.88 per share.
United Rentals, Inc. Price and EPS Surprise
United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote
The consensus estimate for revenues is pegged at $3.77 billion, indicating growth of 6.2% from the prior-year quarter’s level.
Factors at Play
Revenues
The top-line of United Rentals is expected to have gained year over year on the back of solid demand across its end markets, especially for its Equipment Rentals business, the strategic acquisition of Yak and opportunities regarding larger projects. These accretive factors are likely to have aided the performance of URI’s two reportable segments, General Rentals (which contributed 73.1% to first-quarter 2024 total revenues) and Specialty (which contributed 26.9% to first-quarter total revenues).
Segment-wise, our model predicts second-quarter revenues for General Rentals and Specialty to increase year over year by 4.9% to $2.78 billion and 8% to $973.3 million, respectively.
The Equipment Rentals business — which accounted for 84% of first-quarter total revenues — is likely to have witnessed strong demand trend across the segments on the back of increased fleet productivity and average OEC. Apart from Equipment Rentals, other revenue sources include sales of rental equipment, new equipment, contractor supplies and service and other revenues.
For the second quarter, we expect revenues from Equipment Rentals to increase 6.2% year over year to $3.17 billion. The revenues for sales of rental equipment, contractor supplies sales, and service and other revenues are expected to increase 6.2%, 3.4%, and 4.8%, respectively, from the year-ago quarter. On the other hand, we anticipate sales of new equipment revenues to decline year over year by 17.9%.
The Yak acquisition is likely to have enhanced United Rentals’ position in the North American matting industry and boosted the Specialty segment's performance. Its multi-year tailwinds in infrastructure, manufacturing, and energy and power are encouraging. Besides this, the company’s efficient use of its competitive advantages and effective implementation of its strategies, including generating strong free cash flow and rewarding shareholders, are likely to have boosted its performance in the quarter.
Earnings & Margins
The bottom line of United Rentals is expected to have fared well in the second quarter given the significant leverage from the increased top line, decreases in certain discretionary expenses, including travel and entertainment, and cost-effective performance. Yet, increases in the cost of revenues and interest expenses are likely to have partially offset the tailwinds.
We expect adjusted EBITDA to grow 2.4% year over year to $1.74 billion but adjusted EBITDA margin to decline 150 bps. Also, the gross margin is expected to contract 100 bps to 39.1% year over year.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for United Rentals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
Earnings ESP: URI has an Earnings ESP of -1.37%. You can uncover the best stocks they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat on Earnings
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 in their second-quarter results.
Aspen Aerogels, Inc. (ASPN - Free Report) currently has an Earnings ESP of +23.53% and a Zacks Rank of 1.
ASPN’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 68.2%. Earnings for the second quarter of 2024 are expected to increase a whopping 122.7% year over year.
EMCOR Group, Inc. (EME - Free Report) currently has an Earnings ESP of +4.76% and a Zacks Rank of 3.
EME’s earnings for the second quarter are expected to increase 24.8%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 32%.
Dycom Industries, Inc. (DY - Free Report) currently has an Earnings ESP of +4.43% and a Zacks Rank of 2.
DY’s earnings for the second quarter are expected to increase 7.4%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 30.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.