NEW YORK (TheStreet) -- UBS has given United Rentals (URI - Get Report) its vote of confidence on Wednesday, raising its price target and reiterating a "buy" rating. The investment firm upwardly revised its 12-month price target to $92 from $80, a valuation call based on return on invested capital (ROIC) compared to best-in-class (BIC) industrials, such as 3M (MMM), Danaher (DHR) and United Technologies (UTX).
"On average, we find that URI ROIC is ~45% of the BIC group (i.e. a 55% discount). Meanwhile, on 2013 and 2014 consensus EBITDA, URI is trading at a 50% and 51% discount, respectively, to the BIC group," wrote analyst Steven Fisher in the report.
TheStreet Ratings team rates UNITED RENTALS INC as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate UNITED RENTALS INC (URI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, expanding profit margins, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- URI's revenue growth has slightly outpaced the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 7.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 92.85% and other important driving factors, this stock has surged by 69.72% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- 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 95.9% when compared to the same quarter one year prior, rising from $73.00 million to $143.00 million.
- The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 60.41%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.90% is above that of the industry average.
- Net operating cash flow has significantly increased by 54.90% to $237.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.32%.
- You can view the full analysis from the report here: URI Ratings Report