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United Rentals (URI) to Post Q1 Earnings: What's in Store?

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United Rentals, Inc. (URI - Free Report) is scheduled to report first-quarter 2022 results on Apr 27, after market close.

In the last reported quarter, its earnings and revenues missed the Zacks Consensus Estimate by 6.9% and 0.6%, respectively. This largest equipment rental company’s fourth-quarter earnings and revenues grew 46.6% and 21.8% year over year, respectively.

Markedly, its earnings surpassed expectations in 30 of the last 34 quarters. The company topped revenue estimates in 18 of the trailing 19 quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $5.28 per share from $5.31 over the past seven days. Nonetheless, the estimated figure indicates 53% growth from the year-ago earnings of $3.45 per share. The consensus mark for revenues is $2.45 billion, suggesting a 19% year-over-year improvement.

United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote

Factors to Note

Higher pricing and improved activity level backed by stronger demand in each of the end markets served in North America (industrial and other non-construction, commercial construction, and residential construction) are expected to aid United Rentals’ first-quarter results. Recovery across geographies and verticals — with solid activity in heavy manufacturing, corporate campuses, schools and transmission lines — is expected to have contributed to its top line.

The company’s investment in the General Rental segment (wherein the primary growth drivers are non-residential construction and plant maintenance) also bodes well. Both non-residential and maintenance areas have been gaining traction, and verticals like chemical process, food and beverage, metals and mining as well as healthcare have been exhibiting solid growth.

Furthermore, acquisitions (like that of General Finance Corporation and Franklin Equipment buyouts) are expected to have helped United Rentals boost the top line in the quarter.

Overall, construction and industrial markets are expected to have aided the company’s performance. On the industrial side, manufacturing, chemical, processing, metals and mining and entertainment have been performing well. On the Construction side, gains have been mostly from non-residential construction like warehouse, data center work and power.

Equipment Rentals revenues (accounting for more than 83% of its total revenues) are expected to have registered growth in the to-be-reported quarter. The Zacks Consensus Estimate for Rental Equipment revenues is $283 million, which suggests an increase of 6% from the year-ago reported figure.

Yet, the consensus estimate for new equipment sales suggests a decrease of 2% year over year. That said, the consensus mark for Contractor supplies sales indicates 6.3% growth from the prior year. The same for Service and other revenues suggests 8% growth on a year-over-year basis.

From the margin perspective, higher rental operating costs in a slower growth environment — including expenses related to repairing and maintenance of fleet in upstream oil and gas markets — as well as an increase in lower-margin used equipment sales are likely to have affected its bottom line. Importantly, supply chain disruptions and higher inflation may have been causes of concern.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for United Rentals for the quarter to be reported. That is because 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. That is exactly the case here, as you will see below.

Earnings ESP: United Rentals has an Earnings ESP of +10.11%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

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.

Owens Corning (OC - Free Report) has an Earnings ESP of +0.37% and carries a Zacks Rank #3.

OC’s earnings topped the consensus mark in all of the last four quarters, with the average being 15.5%.

PotlatchDeltic Corporation (PCH - Free Report) has an Earnings ESP of +7.24% and holds a Zacks Rank #2.

PCH’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 6.4%.

KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #3.

In the trailing four quarters, KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 10.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

In-Depth Zacks Research for the Tickers Above

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KBR, Inc. (KBR) - free report >>

Potlatch Corporation (PCH) - free report >>

United Rentals, Inc. (URI) - free report >>

Owens Corning Inc (OC) - free report >>