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United Rentals (URI) to Post Q2 Earnings: What's in Store?

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

In the last reported quarter, Unites Rentals’ adjusted earnings and revenues topped the Zacks Consensus Estimate by 8.5% and 2.1%, respectively. This largest equipment rental company’s first-quarter adjusted earnings and revenues grew 66.1% and 22.7% year over year, respectively.

Markedly, its earnings surpassed expectations in 31 of the last 35 quarters. The company’s revenues topped the consensus mark in 19 of the trailing 20 quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $6.57 from $6.60 per share over the past 60 days. Nonetheless, the estimated figure indicates 41% growth from the year-ago earnings of $4.66 per share. The consensus mark for revenues is $2.70 billion, suggesting a 17.9% year-over-year improvement.

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’ second-quarter results.

The company’s investment in the General Rental segment (wherein the primary growth drivers are non-residential construction and plant maintenance) also bodes well. Overall, construction and industrial markets are expected to have aided the company’s performance. On the industrial side, chemical, energy, processing, metals and mining and healthcare have been performing well. On the construction side, gains have been mostly from non-residential construction like warehouse, data center work and power.

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 to be reported.

Equipment Rentals revenues (accounting for more than 75% of its total revenues) are expected to have registered growth in the to-be-reported quarter. The Zacks Consensus Estimate for Equipment Rentals revenues is $1,692 million, which suggests an increase of 15.4% from the year-ago reported figure.

The Zacks Consensus Estimate for Rental Equipment revenues is $215 million, which suggests an increase of 10.8% from the year-ago reported figure.

The consensus estimate for new equipment sales suggests a decrease of 10.5% year over year. That being said, the consensus mark for Contractor supplies sales indicates 5.1% growth from the prior year. The consensus mark for Service and other revenues suggests 8.6% growth on a year-over-year basis.

From the margin perspective, supply-chain disruptions and higher inflation might be causes of concern.

United Rentals, Inc. Price and EPS Surprise United Rentals, Inc. Price and EPS Surprise

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

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 +11.38%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: URI 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.

Lennox International Inc. (LII - Free Report) has an Earnings ESP of +3.01% and carries a Zacks Rank #3.

LII’s earnings topped the consensus mark in three of the last four quarters but missed on one occasion, with the average surprise being 2.3%.

Meritage Homes Corporation (MTH - Free Report) has an Earnings ESP of +2.95% and holds a Zacks Rank #3.

MTH’s earnings topped the consensus mark in all of the last four quarters, with the average surprise being 16.8%.

KBR, Inc. (KBR - Free Report) has an Earnings ESP of +1.81% and a Zacks Rank #1.

KBR’s earnings topped the consensus mark in the last four quarters, with the average surprise being 12%.

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