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Factors Shaping the Fate of United Rentals (URI) Q2 Earnings
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United Rentals, Inc. (URI - Free Report) is scheduled to report second-quarter 2020 results on Jul 29, after market close.
In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 43.2% and 3.6%, respectively. The largest equipment rental company reported earnings and revenue growth of 1.2% and 0.4%, respectively.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 7.1% in the past 30 days to $1.82 per share. This indicates a 61.6% decline from the year-ago earnings of $4.74 per share. The consensus mark for revenues is $1.81 billion, suggesting a 20.8% year-over-year decline.
Undeniably, the COVID-19 pandemic has been impacting construction and industrial vertical markets served by United Rentals. Overall, the company’s construction markets are expected to deliver better results than industrial markets, particularly oil and gas, which remained soft during the quarter.
Softness in the oil & gas market is expected to have impacted United Rentals’ business in the second quarter. Slower industrial growth also added to the woes. Overall, the Equipment Rentals business — accounting for more than 84% of its total revenues — is expected to have generated lower volume and rental rate growth.
The Zacks Consensus Estimate for Equipment Rentals revenues of $1,592 million indicates an 18.8% decline from the year-ago period and 10.7% decrease from first-quarter 2020. The same for rental equipment sales and new equipment sales suggests a decrease of 35% and 29.9%, respectively, from the year-ago reported figures. The consensus estimate for Contractor supplies sales indicates a 20.4% decline from the prior year. The same for Service and other revenues also suggests a 17.4% year-over-year decline in the quarter.
From the margin perspective, higher rental operating costs in a slower growth environment — including costs related to repair and maintenance of fleet in upstream oil and gas markets — and increase in lower-margin used equipment sales are likely to have affected its bottom line.
The Zacks Consensus Estimate for equipment rentals gross profit is pegged at $478 million, indicating a 39.6% decline from the year-ago figure and 21.6% from the last reported quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for United Rentals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: United Rentals has an Earnings ESP of +20.51%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other 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.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +29.11% and holds a Zacks Rank #1.
Foundation Building Materials, Inc. has an Earnings ESP of +28.57% and carries a Zacks Rank #3.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank #3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Factors Shaping the Fate of United Rentals (URI) Q2 Earnings
United Rentals, Inc. (URI - Free Report) is scheduled to report second-quarter 2020 results on Jul 29, after market close.
In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 43.2% and 3.6%, respectively. The largest equipment rental company reported earnings and revenue growth of 1.2% and 0.4%, respectively.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 7.1% in the past 30 days to $1.82 per share. This indicates a 61.6% decline from the year-ago earnings of $4.74 per share. The consensus mark for revenues is $1.81 billion, suggesting a 20.8% year-over-year decline.
United Rentals, Inc. Price and EPS Surprise
United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote
Factors to Note
Undeniably, the COVID-19 pandemic has been impacting construction and industrial vertical markets served by United Rentals. Overall, the company’s construction markets are expected to deliver better results than industrial markets, particularly oil and gas, which remained soft during the quarter.
Softness in the oil & gas market is expected to have impacted United Rentals’ business in the second quarter. Slower industrial growth also added to the woes. Overall, the Equipment Rentals business — accounting for more than 84% of its total revenues — is expected to have generated lower volume and rental rate growth.
The Zacks Consensus Estimate for Equipment Rentals revenues of $1,592 million indicates an 18.8% decline from the year-ago period and 10.7% decrease from first-quarter 2020. The same for rental equipment sales and new equipment sales suggests a decrease of 35% and 29.9%, respectively, from the year-ago reported figures. The consensus estimate for Contractor supplies sales indicates a 20.4% decline from the prior year. The same for Service and other revenues also suggests a 17.4% year-over-year decline in the quarter.
From the margin perspective, higher rental operating costs in a slower growth environment — including costs related to repair and maintenance of fleet in upstream oil and gas markets — and increase in lower-margin used equipment sales are likely to have affected its bottom line.
The Zacks Consensus Estimate for equipment rentals gross profit is pegged at $478 million, indicating a 39.6% decline from the year-ago figure and 21.6% from the last reported quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for United Rentals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: United Rentals has an Earnings ESP of +20.51%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks Worth a Look
Here are some other 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.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +29.11% and holds a Zacks Rank #1.
Foundation Building Materials, Inc. has an Earnings ESP of +28.57% and carries a Zacks Rank #3.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank #3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>