Why United Rental's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of United Rentals (NYS: URI) jumped 15% in trading today after the company announced a strong earnings report.

So what: After the market closed yesterday, United Rentals said it earned $1.35 per share on $1.22 billion in revenue in the third quarter. The revenue number was slightly below the $1.27 billion analysts expected, but earnings crushed the consensus estimate of $1.08 per share.

Now what: Results are up, improving along with the construction segment, and customers are choosing to rent rather than buy in case the economy falters again. This is good news for United Rentals, and with the acquisition of RSC Holdings now complete the company has a broader customer base.

There is some caution in the report however. Investors should keep an eye on utilization and free cash flow estimates for 2012. With that said, the strong earnings beat and a forward P/E of 8.4 is enough for me to think the stock still has plenty of room to move higher.

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The article Why United Rental's Shares Jumped originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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