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United Rentals' (URI) Q2 Earnings to Gain From Robust Demand
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United Rentals, Inc. (URI - Free Report) is scheduled to report second-quarter 2018 results on Jul 18, after the market closes.
Robust market demand enhance United Rentals’ prospects. Strength in non-residential construction, particularly in the commercial and infrastructure sectors, along with a rebound in industrial activity boosts demand.
Apart from higher marker demand, acquisitions have been driving the company’s performance of late and are expected to do so in the second quarter of 2018 as well. The company is poised to benefit from the two most important buyouts in 2017 — Neff Corporation and NES Rentals. The Neff acquisition enhances the company’s earthmoving equipment and efficiencies of scale in key market areas. It resulted in realized synergies of a little more than $8 million in the first quarter of 2018. The trend is expected to reflect in the upcoming quarterly results as well.
The acquisition of NES Rentals Holdings II, Inc (NES) widens United Rentals’ geographic footprint in key markets like East Coast, Gulf States and Midwest. The buyout established the company as an aerial supplier. With NES, United Rentals attained a strategic position in earthmoving with almost a 40% increase in dirt equipment. NES acquisition resulted in realized synergies of $10 million in the first quarter of 2018. The company is on track to garner $40 million or more in cost savings from the transaction.
Let’s delve into other factors that are likely to drive the company’s Q2 earnings.
In the first quarter of 2018, the company posted positive rental rates after several quarters of negative rates. We expect the second-quarter results to reflect positive rental rates as well. Factors such as strong organic growth led by improving end-market demand and acquisitions are likely to help the company witness an improvement in rates.
Equipment Rentals, comprising about 86% of total revenues, is expected to get a boost in the second quarter. The Zacks Consensus Estimate for Equipment Rentals revenues of $1.6 billion reflects sequential growth of 6.3% and year-over-year rise of 13.5%. The consensus estimate for rental equipment sales is $137 million, indicating an increase of 3% from the prior-year quarter. Sales of new equipment are expected to increase 6.4% on a year-over-year basis. Contractor Supplies revenues will likely be flat year over year and Service and Other revenues are expected to rise 17.2%.
Project XL initiatives (set of eight specific work streams to drive growth through revenue opportunities and generate profits via cost savings), prudent investments in fleet, accretive acquisitions and robust demand work in favor of the company. Analysts polled by Zacks expect net sales of $1.80 billion in the said quarter, showing a rise of 12.8% from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.5 per share, implying a rise of 47.7% year over year.
What Does the Zacks Model Unveil?
Our proven model does not conclusively shows that United Rentals is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
United Rentals has an Earnings ESP of -0.25% and a Zacks Rank #3, which does not make us confident of an earnings beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Lennox International, Inc (LII - Free Report) has an Earnings ESP of +1.41% and a Zacks Rank #2. The company is slated to report quarterly numbers on Jul 23.
The company is expected to report quarterly results on Aug 1.
RPM International Inc (RPM - Free Report) has an Earnings ESP of +1.64% and carries a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 19.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
United Rentals' (URI) Q2 Earnings to Gain From Robust Demand
United Rentals, Inc. (URI - Free Report) is scheduled to report second-quarter 2018 results on Jul 18, after the market closes.
Robust market demand enhance United Rentals’ prospects. Strength in non-residential construction, particularly in the commercial and infrastructure sectors, along with a rebound in industrial activity boosts demand.
Apart from higher marker demand, acquisitions have been driving the company’s performance of late and are expected to do so in the second quarter of 2018 as well. The company is poised to benefit from the two most important buyouts in 2017 — Neff Corporation and NES Rentals. The Neff acquisition enhances the company’s earthmoving equipment and efficiencies of scale in key market areas. It resulted in realized synergies of a little more than $8 million in the first quarter of 2018. The trend is expected to reflect in the upcoming quarterly results as well.
The acquisition of NES Rentals Holdings II, Inc (NES) widens United Rentals’ geographic footprint in key markets like East Coast, Gulf States and Midwest. The buyout established the company as an aerial supplier. With NES, United Rentals attained a strategic position in earthmoving with almost a 40% increase in dirt equipment. NES acquisition resulted in realized synergies of $10 million in the first quarter of 2018. The company is on track to garner $40 million or more in cost savings from the transaction.
Let’s delve into other factors that are likely to drive the company’s Q2 earnings.
In the first quarter of 2018, the company posted positive rental rates after several quarters of negative rates. We expect the second-quarter results to reflect positive rental rates as well. Factors such as strong organic growth led by improving end-market demand and acquisitions are likely to help the company witness an improvement in rates.
Equipment Rentals, comprising about 86% of total revenues, is expected to get a boost in the second quarter. The Zacks Consensus Estimate for Equipment Rentals revenues of $1.6 billion reflects sequential growth of 6.3% and year-over-year rise of 13.5%. The consensus estimate for rental equipment sales is $137 million, indicating an increase of 3% from the prior-year quarter. Sales of new equipment are expected to increase 6.4% on a year-over-year basis. Contractor Supplies revenues will likely be flat year over year and Service and Other revenues are expected to rise 17.2%.
Project XL initiatives (set of eight specific work streams to drive growth through revenue opportunities and generate profits via cost savings), prudent investments in fleet, accretive acquisitions and robust demand work in favor of the company. Analysts polled by Zacks expect net sales of $1.80 billion in the said quarter, showing a rise of 12.8% from the year-ago quarter’s figure. The consensus estimate for earnings is pegged at $3.5 per share, implying a rise of 47.7% year over year.
What Does the Zacks Model Unveil?
Our proven model does not conclusively shows that United Rentals is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
United Rentals has an Earnings ESP of -0.25% and a Zacks Rank #3, which does not make us confident of an earnings beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
United Rentals, Inc. Price and EPS Surprise
United Rentals, Inc. Price and EPS Surprise | United Rentals, Inc. Quote
Other Stocks Worth a Look
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Lennox International, Inc (LII - Free Report) has an Earnings ESP of +1.41% and a Zacks Rank #2. The company is slated to report quarterly numbers on Jul 23.
KBR, Inc (KBR - Free Report) has an Earnings ESP of +2.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is expected to report quarterly results on Aug 1.
RPM International Inc (RPM - Free Report) has an Earnings ESP of +1.64% and carries a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 19.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>