United Rentals, a holding company engaged in the business of equipment rental, operates general rentals and trench safety, power and heating, ventilating and air conditioning (HVAC), and pump solutions.
As Sunbelt Rentals, the second largest North American equipment rental provider, has reported 27% rental revenue growth in three months to April 2015, Jefferies made implications for United Rentals.
The firm reduced 2015 estimates to $8.04 earnings per share from $8.34, and reduced EBITDA to $2.90 billion from $2.95 billion, according to the analyst note.
Separately, the supplier of rental industrial and construction equipment was the worst-performing stock on the S&P 500 after analysts at Macquarie downgraded it to "underperform" from "neutral" and maintained a $80 price target, according to the Financial Times.
TheStreet Ratings team rates UNITED RENTALS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED RENTALS INC (URI) a BUY. This is driven by multiple strengths, 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, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. 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 analysis by TheStreet Ratings Team goes as follows:
- URI's revenue growth has slightly outpaced the industry average of 5.2%. 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 ($8.37 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.
- Net operating cash flow has increased to $675.00 million or 32.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 22.53%.
- You can view the full analysis from the report here: URI Ratings Report