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United Rentals (URI) Q3 Earnings to Gain From Higher Rates

Zacks Equity Research
Updated

United Rentals, Inc. URI, the largest equipment rental company in the world, is scheduled to report third-quarter 2017 results on Oct 18, 2017, after market close.

We expect the company’s rental revenues to increase in the to-be-reported quarter after eight consecutive quarters of negative rental rates. Factors such as strong organic growth led by improving end-market demand, NES acquisition as well as hurricane Harvey and Irma related rental work are likely to help the company generate better rates, thereby giving a strong support to its bottom line.

The re-build activities will provide meaningful benefit to United Rentals and the entire rental industry through 2018 as well, thereby boosting rental revenues, equipment utilization and rental rates.

Equipment Rentals, comprising about 86% of the total revenues, is expected to get a boost in third quarter. The Zacks Consensus Estimate for Equipment Rentals revenues of $1.5 billion reflect a growth of 10% sequentially and 13.8% from the year-ago quarter. On the other hand, consensus estimate for Rental Equipment revenues of $127 million indicates an increase of 13.4% from the prior quarter. Again, New Equipment revenues are expected to increase 18.7% on a year-over-year basis. Contractor Supplies revenues will likely witness 1.2% growth and that for Service and Other Revenues 7.8%.

The company has been experiencing higher demand in its core construction and industrial sectors. Commercial construction has also remained strong. Upstream oil and gas is also gaining traction with improving macro conditions. United Rentals’ rental revenues were up 13.5% year over year in the last reported quarter. The company is likely to experience similar trends in the to-be-reported quarter.

Overall, for the third quarter, the Zacks Consensus Estimate for total revenues is pegged at $1.72 billion, implying 13.7% growth. The solid improvement in the top line, driven by higher rates and volume, is expected to give a meaningful boost to the company’s earnings. The Zacks Consensus Estimate for earnings stands at $2.99, reflecting a 16% year-over-year increase.

United Rentals, Inc. Price and EPS Surprise

 

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

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Here is what our quantitative model predicts:

United Rentals does not have the right combination of two main ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

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

Zacks ESP: The Earnings ESP for United Rentals is -1.50%.

Zacks Rank: United Rentals carries a Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of an earnings beat.

Stocks Worth a Look

Here are a few construction stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Owens Corning OC has an Earnings ESP of +0.55% and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is set to report third-quarter results on Oct 25 before the opening bell.

Potlatch Corporation PCH has an Earnings ESP of +1.43% and boasts a Zacks Rank #1. The company is set to report quarterly results on Oct 23.

Louisiana-Pacific Corporation LPX has an Earnings ESP of +3.49% and boasts a Zacks Rank #1. The company is set to report third-quarter results on Nov 6.

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United Rentals, Inc. (URI) : Free Stock Analysis Report
 
Owens Corning Inc (OC) : Free Stock Analysis Report
 
Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
 
Potlatch Corporation (PCH) : Free Stock Analysis Report
 
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