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Category: Stock Market and United Rentals
Date: 21 October 2019 Stock Price: $128.66 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of United Rentals the largest equipment rental company in the world with over 1100 rental locations across the United States, Canada and Europe
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About United Rentals
We are the largest equipment rental company in the world, with an integrated network of 1,183 rental locations in the United States, Canada and Europe. As discussed in note 3 to the condensed consolidated financial statements, in July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets. Although the equipment rental industry is highly fragmented and diverse, we believe that we are well positioned to take advantage of this environment because, as a larger company, we have more extensive resources and certain competitive advantages. These include a fleet of rental equipment with a total original equipment cost (“OEC”) of $15.0 billion, and a national branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the largest 100 metropolitan areas in the U.S.
The BakerCorp acquisition discussed above added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network. Our size also gives us greater purchasing power, the ability to provide customers with a broader range of equipment and services, the ability to provide customers with equipment that is more consistently well-maintained and therefore more productive and reliable, and the ability to enhance the earning potential of our assets by transferring equipment among branches to satisfy customer needs. We offer approximately 4,000 classes of equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues. Equipment rentals represented 86 percent of total revenues for thenine months ended September 30, 2019.
The BakerCorp acquisition discussed above added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network. Our size also gives us greater purchasing power, the ability to provide customers with a broader range of equipment and services, the ability to provide customers with equipment that is more consistently well-maintained and therefore more productive and reliable, and the ability to enhance the earning potential of our assets by transferring equipment among branches to satisfy customer needs. We offer approximately 4,000 classes of equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues. Equipment rentals represented 86 percent of total revenues for thenine months ended September 30, 2019.
Overview of United Rentals' latest earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenues: $2.488 billion (up from $2.116billion for the same period of the previous year)
- Revenues increased by 17.5% over the last 12 months
- Cost of revenues $1.455 billion (up from $1.178 billion for the same period of the previous year)
- Cost of revenue increased by 23.5% over the last 12 months
- Net earnings: $391 million (up from $333 million for the same period of the previous year)
- Diluted earnings per share: $5.08 (up from $4.01 for the same period of the previous year)
- PE ratio: 6.4
- Dividend declared: $0.43
- Dividend yield: 2.96%
- Diluted weighted-average shares outstanding: 79.8 million
- Cash and cash equivalents: $60 million
- Cash and cash equivalents per share: $0.75
- Cash and cash equivalents makes up 058% of United Rentals' market capital
- Cash and cash equivalents makes up 0.31% of United Rentals' total assets
- Accounts receivable: $1.595 billion
- Accounts receivable makes up 8.21% of United Rentals' total assets
- Stockholders equity of United Rentals: $3.64 billion
- Stockholders equity per share: $45.61
- So United Rentals is trading a 2.81 times its stockholders equity which is within the expected range of between 2 and 4 which most firms tend to trade at.
- Cash generated from operations (for the 9 months): $2.582 billion
- Cash generated from operations per share (for the 9 months): $32.35
United Rentals' management commentary on the results
ded September 30, 2019. For the past several years, we have executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies. In particular, we have focused on customer segmentation, customer service differentiation, rate management, fleet management and operational efficiency.
In 2019, we have continued our disciplined focus on increasing our profitability and return on invested capital. In particular, our strategy calls for:
In 2019, we have continued our disciplined focus on increasing our profitability and return on invested capital. In particular, our strategy calls for:
- A consistently superior standard of service to customers, often provided through a single point of contact;
- The further optimization of our customer mix and fleet mix,with a dual objective: to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;
- A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement. We continue to implement Lean kaizen processes across our branch network, with the objectives of: reducing the cycle time associated with renting our equipment to customers; improving invoice accuracy and service quality; reducing the elapsed time for equipment pickup and delivery; and improving the effectiveness and efficiency of our repair and maintenance operations;
- A continued focus on Project XL,which is a set of eight specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business;
- The continued expansion of our trench, power and fluid solutions footprint, as well as our tools of ering, and the cross-selling of these services throughout our network, as exhibited by our acquisition of BakerCorp. We believe that the expansion of our trench, power and fluid solutions business, as well as our tools offering, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and
- The pursuit of strategic acquisitions to continue to expand our core equipment rental business, as exhibited by our recently completed acquisitions of NES Rentals Holdings II, Inc. (“NES”), Neff Corporation ("Neff") and BlueLine. Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.
United Rentals (NYSE: URI) stock price history
The image below, obtained from Google, shows the stock price history of Sonoco Products over the last 5 years. And it's been a very volatile and mildly positive time for United Rentals stockholders. 5 years ago the stock was trading at around $108 a stock and its currently trading at $128.66 a stock. That's a average return of 19.1% provided to United Rentals stockholders over the last 5 years. The opportunity cost of holding United Rentals which only returned 19.1% over the last 5 years compared to a stock like Netflix that returned over 300% for the same time period becomes very significant.
The stock of United Rentals is trading at closer to its 52 week high of $142.69 than it is to its 52 week low of $94.28, which to us is an indication that the short term sentiment and momentum of United Rentals is positive.
The stock of United Rentals is trading at closer to its 52 week high of $142.69 than it is to its 52 week low of $94.28, which to us is an indication that the short term sentiment and momentum of United Rentals is positive.
Recent coverage of United Rentals
The extract below covers the latest news regarding Sonoco as obtained from Zacks.com
United Rentals, Inc. (URI - Free Report) was a big mover last session, as the company saw its shares rise more than 5% on the day. The move came on solid volume too with far more shares changing hands than in a normal session. This stock, which remained volatile and traded within the range of $109.20 –$128.40 in the past one-month time frame, witnessed a sharp increase yesterday. The upmove came after the company reported better-than-expected third-quarter 2019 results.
The company has seen two negative estimate revisions in the past few weeks, while its Zacks Consensus Estimate for the current quarter has also moved lower over the past few weeks, suggesting there may be trouble down the road. So make sure to keep an eye on this stock going forward, to see if this recent move higher can last. United Rentals currently has a Zacks Rank #3 (Hold) while its Earnings ESP is negative.
Read the full article here
United Rentals, Inc. (URI - Free Report) was a big mover last session, as the company saw its shares rise more than 5% on the day. The move came on solid volume too with far more shares changing hands than in a normal session. This stock, which remained volatile and traded within the range of $109.20 –$128.40 in the past one-month time frame, witnessed a sharp increase yesterday. The upmove came after the company reported better-than-expected third-quarter 2019 results.
The company has seen two negative estimate revisions in the past few weeks, while its Zacks Consensus Estimate for the current quarter has also moved lower over the past few weeks, suggesting there may be trouble down the road. So make sure to keep an eye on this stock going forward, to see if this recent move higher can last. United Rentals currently has a Zacks Rank #3 (Hold) while its Earnings ESP is negative.
Read the full article here
United Rentals (NYSE: URI) latest stock valuation
So what is United Rentals stock worth based on the release of their latest earnings report? Based on United Rentals latest earnings report and their outlook our valuation models provide a target (full value) price of United Rentals' stock at $182.70 a stock. Therefore we believe the stock of Sonoco is slightly undervalued at its current price of $182.70
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $182.70 so a good entry point into United Rentals stock would be at $164.40 or below. We expect that the stock of United Rentals will kick upwards in coming weeks and months to levels closer to our target (full value) price. While slower economic growth in the US will in all likelihood affect short and medium earnings for the group, we believe that the group's current financial state justifies the the valuation we calculated.
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target (full value) price which in this case is $182.70 so a good entry point into United Rentals stock would be at $164.40 or below. We expect that the stock of United Rentals will kick upwards in coming weeks and months to levels closer to our target (full value) price. While slower economic growth in the US will in all likelihood affect short and medium earnings for the group, we believe that the group's current financial state justifies the the valuation we calculated.
United Rentals next earnings report
It is expected that United Rentals will release their 4th quarter and full fiscal 2019 earnings report in late January 2019