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United Rentals Inc Stock Hold Recommendation Reiterated (URI)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- United Rentals (NYSE: URI) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

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Highlights from the ratings report include:

  • URI's very impressive revenue growth greatly exceeded the industry average of 7.0%. Since the same quarter one year prior, revenues leaped by 67.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 41.4% when compared to the same quarter one year prior, rising from $29.00 million to $41.00 million.
  • The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 57.50%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.28% trails the industry average.
  • The debt-to-equity ratio is very high at 4.68 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, URI has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, UNITED RENTALS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It offers approximately 3,300 classes of equipment for rent to customers comprising construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. United Rentals has a market cap of $4.74 billion and is part of the services sector and diversified services industry. The company has a P/E ratio of 64.5, above the S&P 500 P/E ratio of 17.7. Shares are up 15.8% year to date as of the close of trading on Friday.

You can view the full United Rentals Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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