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Why Is United Rentals (URI) Down 5.9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for United Rentals, Inc. (URI - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
United Rentals Beats Q1 Earnings, Updates 2017 View
United Rentals first-quarter 2017 adjusted earnings of $1.63 per share beat the Zacks Consensus Estimate of $1.58 by 3.2%. Earnings also increased 16.4% year over year.
The company reported solid volume growth and record time utilization, driven by strength in its core construction markets. Positive trends in the upstream oil and gas business also drove the upside.
Revenues
Total revenue of $1.36 billion increased 3.8% year over year.
In the first quarter of 2017, rental revenues were $1.17 billion, up 4.5% from the year-ago quarter. Volume of equipment on rent increased 7% while rental rates fell 1.4%.
Segment Discussion
General Rentals: Segment rental revenues increased 2.3% year over year to $977 million. Segment equipment rentals’ gross profit inched up 0.8% to $360 million.
Trench, Power and Pump: The company’s Trench, Power and Pump specialty segment's rental revenues rose 16.7% year over year to $189 million, primarily on a same-store basis. Segment equipment rentals’ gross profit climbed 23.5% to $84 million.
Time Utilization & Fleet Size
Time utilization increased 190 basis points (bps) year over year to 66%, marking a record first quarter for the company.
The size of the rental fleet was $8.92 billion of original equipment cost as of Mar 31, 2017, compared with $8.99 billion as of Dec 31, 2016. The age of the rental fleet was 45.9 months on an OEC-weighted basis as of Mar 31, 2017, compared with 45.2 months as of Dec 31, 2016.
Margins
Total equipment rentals gross margin expanded 10 bps year over year to 38.1%.
General Rentals equipment rentals’ gross margin decreased 60 bps to 36.8% while that for Trench, Power and Pump expanded 240 bps to 44.4%.
Adjusted EBITDA was $591 million, compared with $584 million in the prior-year quarter. Adjusted EBITDA margin was 43.6%, down 100 bps from the prior-year quarter.
Balance Sheet
United Rentals’ cash and cash equivalents totaled $337 million as of Mar 31, 2017, compared with $312 million as of Dec 31, 2016.
In the quarter, the company generated $623 million of net cash from operating activities, compared with $604 million for the same period last year. Free cash flow was $490 million, less than $627 million reported in the prior-year quarter.
Return on invested capital was 8.4% for the 12 months ended Mar 31, 2017, a decrease of 30 bps from the 12 months ended Mar 31, 2016.
2017 Guidance Updated
The company updated its 2017 outlook following the acquisition of NES Rentals.
Total revenue is now expected in the $6.05 billion to $6.25 billion range, higher than the prior $5.75 billion to $5.95 billion range. The Zacks Consensus Estimate for 2017 revenues stands at $6.18 billion.
Adjusted EBITDA is projected between $2.835 billion and $2.985 billion, compared to the prior expectation of $2.7 billion to $2.85 billion.
Net rental capital expenditures after gross purchases are likely to be $925 million to $1.7 billion, higher than $750 million reported in 2016 and the prior expectation of $900 million to $1.05 billion.
Net cash provided by operating activities is expected in the $1.85 billion to $2.05 billion range, more than $1.675 billion to $1.875 billion expected earlier.
Free cash flow is expected in the $800 million to $900 million range, higher than $650 million to $750 million expected previously.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been two downward revisions for the current quarter compared to one upward.
At this time, United Rentals' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is United Rentals (URI) Down 5.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for United Rentals, Inc. (URI - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
United Rentals Beats Q1 Earnings, Updates 2017 View
United Rentals first-quarter 2017 adjusted earnings of $1.63 per share beat the Zacks Consensus Estimate of $1.58 by 3.2%. Earnings also increased 16.4% year over year.
The company reported solid volume growth and record time utilization, driven by strength in its core construction markets. Positive trends in the upstream oil and gas business also drove the upside.
Revenues
Total revenue of $1.36 billion increased 3.8% year over year.
In the first quarter of 2017, rental revenues were $1.17 billion, up 4.5% from the year-ago quarter. Volume of equipment on rent increased 7% while rental rates fell 1.4%.
Segment Discussion
General Rentals: Segment rental revenues increased 2.3% year over year to $977 million. Segment equipment rentals’ gross profit inched up 0.8% to $360 million.
Trench, Power and Pump: The company’s Trench, Power and Pump specialty segment's rental revenues rose 16.7% year over year to $189 million, primarily on a same-store basis. Segment equipment rentals’ gross profit climbed 23.5% to $84 million.
Time Utilization & Fleet Size
Time utilization increased 190 basis points (bps) year over year to 66%, marking a record first quarter for the company.
The size of the rental fleet was $8.92 billion of original equipment cost as of Mar 31, 2017, compared with $8.99 billion as of Dec 31, 2016. The age of the rental fleet was 45.9 months on an OEC-weighted basis as of Mar 31, 2017, compared with 45.2 months as of Dec 31, 2016.
Margins
Total equipment rentals gross margin expanded 10 bps year over year to 38.1%.
General Rentals equipment rentals’ gross margin decreased 60 bps to 36.8% while that for Trench, Power and Pump expanded 240 bps to 44.4%.
Adjusted EBITDA was $591 million, compared with $584 million in the prior-year quarter. Adjusted EBITDA margin was 43.6%, down 100 bps from the prior-year quarter.
Balance Sheet
United Rentals’ cash and cash equivalents totaled $337 million as of Mar 31, 2017, compared with $312 million as of Dec 31, 2016.
In the quarter, the company generated $623 million of net cash from operating activities, compared with $604 million for the same period last year. Free cash flow was $490 million, less than $627 million reported in the prior-year quarter.
Return on invested capital was 8.4% for the 12 months ended Mar 31, 2017, a decrease of 30 bps from the 12 months ended Mar 31, 2016.
2017 Guidance Updated
The company updated its 2017 outlook following the acquisition of NES Rentals.
Total revenue is now expected in the $6.05 billion to $6.25 billion range, higher than the prior $5.75 billion to $5.95 billion range. The Zacks Consensus Estimate for 2017 revenues stands at $6.18 billion.
Adjusted EBITDA is projected between $2.835 billion and $2.985 billion, compared to the prior expectation of $2.7 billion to $2.85 billion.
Net rental capital expenditures after gross purchases are likely to be $925 million to $1.7 billion, higher than $750 million reported in 2016 and the prior expectation of $900 million to $1.05 billion.
Net cash provided by operating activities is expected in the $1.85 billion to $2.05 billion range, more than $1.675 billion to $1.875 billion expected earlier.
Free cash flow is expected in the $800 million to $900 million range, higher than $650 million to $750 million expected previously.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been two downward revisions for the current quarter compared to one upward.
United Rentals, Inc. Price and Consensus
United Rentals, Inc. Price and Consensus | United Rentals, Inc. Quote
VGM Scores
At this time, United Rentals' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.