United Rentals Earnings Preview

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United Rentals (NYS: URI) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings on Wednesday, Jan. 25. United Rentals is an equipment rental company, which offers equipment for rent to customers that include construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back United Rentals, with six of eight rating it a buy and the remainder rating it a hold. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $687.9 million in revenue this quarter. That would represent a rise of 15.2% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.58 per share. Estimates range from $0.39 to $0.73.

What our community says:
CAPS All-Stars are solidly behind the stock with 85.7% giving it an "outperform" rating. The community at large concurs with the All-Stars with 89.3% awarding it a rating of "outperform." Fools are bullish on United Rentals, though the message boards have been quiet lately with only 96 posts in the past 30 days. United Rentals' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Revenue has now gone up for three straight quarters. The company boosted its gross margin by 3.9 percentage points in the last quarter. Revenue rose 17.9% while cost of sales rose 10.9% to $439 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ3Q2Q1Q4
Gross Margin38.4%33.5%26.4%29.3%
Operating Margin21.9%15.1%5.7%7.9%
Net Margin9.1%4.3%(3.8%)(3.5%)

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