Shares of United Rentals, Inc. (URI) crafted a new 52-week high of $79.64 on Jan 13, up from its previous high of $79.43.
The stock closed at $77.08 at the end of trading yesterday, with a solid one-year return of about 60%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 1460K. This Greenwich, Connecticut-based equipment rental and leasing services provider has a market cap of $7.2 billion and long-term expected earnings growth of 18%.
United Rentals’ Strengths
On Oct 16, United Rentals reported third-quarter 2013 adjusted earnings of $1.63 per share, beating the Zacks Consensus Estimate of $1.58 and up 20.7% from the prior-year quarter. The company has kept the earnings streak alive for the past four quarters with an average surprise of 12.2%.
Time utilization for United Rentals increased 100 basis points year over year to 70.8% in the third quarter. The company also realized cost synergies of $64 million from the RSC integration.
United Rentals reiterated its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance for full-year 2013 in the range of $2.25–$2.35 billion. The company also reaffirmed its outlook for time utilization of around 68.0%. In addition, the projected cost synergies on a run-rate basis have been retained in the band of $230–$250 million.
Recently, United Rentals has announced the expansion of its specialty branch network in the U.S. and Canada. With this, the company met its target for 18 strategic openings in 2013, with more planned for 2014. This addition to the specialty division will enhance the services offered to customers.
United Rentals’ board of directors authorized a $500 million share repurchase program, which is expected to be completed within 18 months. This will boost its earnings. The company is also poised to benefit from a rebound in non-residential construction.
United Rentals currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in the sector include James Hardie Industries plc (JHX), Conns Inc. (CONN) and Masco Corp. (MAS). While James Hardie and Conns carry a Zacks Rank #1 (Strong Buy), Masco has a Zacks Rank #2 (Buy).
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