Yahoo Finance Is United Rentals (URI) Stock Poised for a Solid 2023 Too?
United Rentals, Inc. URI stock gained 53% over the past six months, outperforming the Zacks Building Products - Miscellaneous industry’s 12.6% growth. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
Even 2023 exhibits widespread growth opportunities across its verticals, with continuous growth opportunities for non-residential and industrial verticals.
This Zacks Rank #1 (Strong Buy) stock has a long-term earnings growth rate of 18.2%, which highlights its inherent strength. We believe that United Rentals offers a sound investment opportunity, as evident from its VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate has witnessed an uptrend over the past seven days as analysts raised their estimates. Over the said time frame, the Zacks Consensus Estimate of $37.39 for 2023 has increased from $37.14. The Zacks Consensus Estimate for 2023 earnings of $37.39 per share calls for 14.9% year-over-year growth.
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Let’s take a look at the factors supporting the growth.
Higher Infrastructural Spending & Solid 2023 Prospects: United Rentals and other construction companies are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security and a potential super-cycle in global supply-chain investments. Notably, United Rentals is expected to maintain positive momentum in the near term, as the company’s solutions are closely aligned with President Biden’s policies and industry trends.
The need to rebuild the nation’s deteriorating roads and bridges and fund new climate-resilient and broadband initiatives is expected to help URI. The company expects a diverse mix of federal projects for road and bridge work, water control, harbors and ports and the power grid, which will drive growth in 2023.
URI sees substantial opportunities in 2023 across federally funded infrastructure projects, industrial manufacturing, energy and power. It expects to deliver another year of profitable growth, strong cash flow and attractive returns for shareholders.
Higher Rental Revenues: United Rentals has been witnessing widespread growth in rental revenues, which represented 88.3% of the company’s total revenues in the first nine months of 2022. During the said period, rental revenue grew 25%. In the third quarter of 2022, rental revenues from non-residential construction verticals were up 24% year over year, and the same from infrastructure and industrial were up 11% and 13%, respectively.
Higher ROE: United Rentals’ trailing 12-month return on equity (ROE) is indicative of growth potential. The company’s ROE of 35.4% compared favorably with the industry’s 8.7%, which signals more efficiency in using shareholders’ funds than peers.
3 Construction Stocks Hogging in the Limelight
Other top-ranked stocks, which warrant a look in the Construction sector, include:
CRH plc CRH sports a Zacks Rank #1, at present. Shares of CRH gained 28% in the past six months.
The Zacks Consensus Estimate for CRH’s 2023 sales and EPS suggests growth of 3.6% and 18.4%, respectively, from the comparable year-ago period’s levels.
Altair Engineering ALTR — holding a Zacks Rank #2 (Buy) — provides software and cloud solutions in simulation, high-performance computing, data analytics and artificial intelligence worldwide.
ALTR’s expected earnings growth rate for 2023 is 21.5%. Shares of ALTR gained 8.7% in the past six months.
Sterling Infrastructure, Inc. STRL — carrying a Zacks Rank #2 — provides transportation, e-infrastructure and building solutions. Shares of STRL gained 35.7% in the past six months.
STRL’s expected earnings growth rate for 2023 is 8.7%. The Zacks Consensus Estimate for 2023 earnings has improved to $3.41 from $3.37 over the past 30 days.
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Altair Engineering Inc. (ALTR) : Free Stock Analysis Report
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CRH PLC (CRH) : Free Stock Analysis Report
