Trade-Ideas: United Rentals (URI) Is Today's Weak On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified United Rentals ( URI) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified United Rentals as such a stock due to the following factors:

  • URI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $142.9 million.
  • URI has traded 881,624 shares today.
  • URI is trading at 8.24 times the normal volume for the stock at this time of day.
  • URI is trading at a new low 6.09% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on URI:

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench Safety, Power and HVAC (heating, ventilating and air conditioning), and Pump Solutions. URI has a PE ratio of 18. Currently there are 8 analysts that rate United Rentals a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for United Rentals has been 1.8 million shares per day over the past 30 days. United Rentals has a market cap of $10.1 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.16 and a short float of 10.8% with 7.28 days to cover. Shares are up 2.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates United Rentals as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • URI's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 11.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • UNITED RENTALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED RENTALS INC increased its bottom line by earning $5.18 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($8.35 versus $5.18).
  • 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 91.7% when compared to the same quarter one year prior, rising from $60.00 million to $115.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Trading Companies & Distributors industry and the overall market, UNITED RENTALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 58.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.74% is above that of the industry average.

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