How United Rentals Stock Has Been Performing

United Rentals (URI) has recently drawn attention as a momentum stock, helped by revenue growth and earnings per share supported by share buybacks. The company runs what is described as the largest equipment rental fleet globally.

For investors tracking performance, the stock is up 3.8% over the past month and 19% over the past 3 months. The year to date return stands at 34.6%, with a 1 year total return of 31.9%.

Looking over a longer horizon, United Rentals shows a 3 year total return of 139.5% and a 5 year total return of 235.9%. The company recently closed at US$1,137.52, giving it a market value of about US$72.4b.

On the fundamental side, United Rentals reports annual revenue of US$16.8b and net income of US$2.6b. The latest figures show annual revenue growth of 8.3% and net income growth of 11.8%.

United Rentals operates through two segments. General Rentals generates about US$11.3b of revenue, while Specialty contributes roughly US$5.6b. These operations cover construction, industrial, infrastructure, municipal and other customers across several regions.

Recent moves in United Rentals reflect strong momentum, with the share price delivering a 19% 3 month return and a 34.6% year to date share price return alongside a 5 year total shareholder return of 235.9%.

If you are comparing United Rentals to other opportunities tied to long term infrastructure and construction themes, it can be useful to review 37 power grid technology and infrastructure stocks

After a strong move that lifted United Rentals to around US$1,137 per share, the real fork in the road is simple: Is this momentum worth paying up for now, or is patience on price more sensible before adding exposure?

Most Popular Narrative: 1.5% Undervalued

Based on the most followed narrative, United Rentals has a fair value estimate of about $1,154.86 compared with the recent close at $1,137.52. That small gap frames the current discussion around whether the recent momentum lines up with the long term fundamentals.

The company is expanding its Specialty business through new cold starts, which grew 22% year-over-year and 15% pro forma. This growth is anticipated to positively impact both revenue and net margins as the business becomes a larger share of total sales.

Want to see what sits behind that fair value for United Rentals? The core narrative leans on steady revenue expansion, improving margins, and a richer earnings base a few years out.

The narrative uses an 8.58% discount rate and a multi year view of revenue, earnings and margins to arrive at its fair value estimate of $1,154.86. Analysts in that framework also factor in share repurchases and a future P/E that sits above the current industry figure, which helps explain why the outcome is only slightly above the present share price.

Result: Fair Value of $1,154.86 (UNDERVALUED)

However, the United Rentals narrative could be tested if large project activity softens, or if high capital spending starts to restrict the company’s financial flexibility.

Another View on United Rentals Valuation

The fair value narrative around United Rentals leans on future earnings, but the price today can also be checked against its current P/E ratio of 26.8x. That stands below the US Trade Distributors industry at 27.9x and below a fair ratio estimate of 35.1x. This points to possible upside, while also raising the question of how much of that gap will actually close.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out United Rentals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With United Rentals showing a mix of momentum, fair value debate and both risks and rewards, it helps to move fast and check the full picture for yourself. To weigh up the positives alongside the concerns, start by reviewing the 4 key rewards and 2 important warning signs.

Looking for more investment ideas beyond United Rentals?

If United Rentals has your attention, do not stop here. Fresh ideas from different corners of the market can help you build a stronger, more resilient portfolio.

• Strengthen your hunt for value by checking companies that appear mispriced on fundamentals through the 51 high quality undervalued stocks.
• Target reliable income streams by reviewing companies with higher yields and resilient payouts using the 9 dividend fortresses.
• Prioritize capital preservation by focusing on companies that show lower risk characteristics with the 83 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.