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United Rentals, Inc. (URI - Free Report) is on a roll as the North American economy heats up. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by over 40% in 2018.
United Rentals is the largest equipment rental company in the world with 997 rental locations in 49 states and every Canadian province.
In 2017, it acquired Neff Corporation for $1.3 billion which has boosted its employee count to 14,800. The company serves construction and industrial customers, utilities, municipalities, the oil and gas sector, homeowners and others.
A Strong Fourth Quarter to Close Out a Record Year
On Jan 24, United Rentals reported its fourth quarter and full year 2017 results. It met on the Zacks Consensus for the fourth quarter, reporting $3.34.
But the earnings meet was only a small part of the story.
Rental revenue rose 26.8% with owned rental revenue jumping 26.5%.
Time utilization increased 70 basis points year-over-year to 70%.
It's saw strength in the Trench, Power and Pump segment, where rental revenue rose 38.7% year-over-year and the rental gross margin improved by 230 basis points to 47.5%.
For the year, rental rates rose 2%. The company exceeded its upper-band of guidance on total revenue, adjusted EBITDA and free cash flow.
Tax Reform Implications
United Rentals is one company that will see a big benefit from the tax reform.
On a net basis, and leaving all other factors unchanged, United Rentals estimates it will benefit by at least $250 million.
It also expects an effective tax rate of about 25% in 2018.
Share Repurchase Program Re-Started
The company has had a $1 billion share repurchase program since November 2015. It was paused in October 2016 due to mergers and acquisitions.
At that time, it had completed $627 million of the program.
In 2017, it bought $28 million worth of stock, leaving $345 million remaining.
In 2018, it intends to complete the program. In other words, it's buying back $345 million in shares this year.
Analysts Are Bullish
There was a lot to like in the fourth quarter report and 2018 outlook.
The analysts are bullish about both 2018 and 2019.
The 2018 Zacks Consensus Estimate jumped to $15.05 from $13.48 after the earnings report. That's earnings growth of 42.1%.
Similarly, 2019's consensus rose to $17.11 from $15.20. That's further earnings growth of 13.7%.
Shares at Multi-Year Highs
Shares have been on a tear the last 2 years, rising 277.8%.
But because the earnings are also rising at a dramatic clip, this stock is still cheap.
It trades with a forward P/E of just 12, which is well under the average of the S&P 500 of 19.3.
For investors looking for a way to invest in the growing US economy, especially in construction and energy, then United Rentals is one to keep on your short list.
[In full disclosure, the author of this article owns shares of URI in her personal portfolio.]
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks’ has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
Bull of the Day: United Rentals (URI)
United Rentals, Inc. (URI - Free Report) is on a roll as the North American economy heats up. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by over 40% in 2018.
United Rentals is the largest equipment rental company in the world with 997 rental locations in 49 states and every Canadian province.
In 2017, it acquired Neff Corporation for $1.3 billion which has boosted its employee count to 14,800. The company serves construction and industrial customers, utilities, municipalities, the oil and gas sector, homeowners and others.
A Strong Fourth Quarter to Close Out a Record Year
On Jan 24, United Rentals reported its fourth quarter and full year 2017 results. It met on the Zacks Consensus for the fourth quarter, reporting $3.34.
But the earnings meet was only a small part of the story.
Rental revenue rose 26.8% with owned rental revenue jumping 26.5%.
Time utilization increased 70 basis points year-over-year to 70%.
It's saw strength in the Trench, Power and Pump segment, where rental revenue rose 38.7% year-over-year and the rental gross margin improved by 230 basis points to 47.5%.
For the year, rental rates rose 2%. The company exceeded its upper-band of guidance on total revenue, adjusted EBITDA and free cash flow.
Tax Reform Implications
United Rentals is one company that will see a big benefit from the tax reform.
On a net basis, and leaving all other factors unchanged, United Rentals estimates it will benefit by at least $250 million.
It also expects an effective tax rate of about 25% in 2018.
Share Repurchase Program Re-Started
The company has had a $1 billion share repurchase program since November 2015. It was paused in October 2016 due to mergers and acquisitions.
At that time, it had completed $627 million of the program.
In 2017, it bought $28 million worth of stock, leaving $345 million remaining.
In 2018, it intends to complete the program. In other words, it's buying back $345 million in shares this year.
Analysts Are Bullish
There was a lot to like in the fourth quarter report and 2018 outlook.
The analysts are bullish about both 2018 and 2019.
The 2018 Zacks Consensus Estimate jumped to $15.05 from $13.48 after the earnings report. That's earnings growth of 42.1%.
Similarly, 2019's consensus rose to $17.11 from $15.20. That's further earnings growth of 13.7%.
Shares at Multi-Year Highs
Shares have been on a tear the last 2 years, rising 277.8%.
But because the earnings are also rising at a dramatic clip, this stock is still cheap.
It trades with a forward P/E of just 12, which is well under the average of the S&P 500 of 19.3.
For investors looking for a way to invest in the growing US economy, especially in construction and energy, then United Rentals is one to keep on your short list.
[In full disclosure, the author of this article owns shares of URI in her personal portfolio.]
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks’ has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 4 crypto-related stocks now >>