URI United Rentals

The economy is improving, but doing so at its own sluggish pace. So renting is still preferable for many consumers and businesses. United Rentals, Inc. (URI) has surely been a beneficiary of this, and today it rode a solid session to the apex of the Zacks #1 Rank Top Performers List.

Shares of the company surged 9.2% Wednesday, far outpacing all other top performers. Volume surpassed 6.5 million, compared to the daily average of 1.7 million.

The company’s third quarter report was the first time since the third quarter of the previous year that URI surpassed profit expectations. The company reported 92 cents per share, which was approximately 21% better than the Zacks Consensus Estimate of 76 cents.

Rental revenue jumped 19.1% in the quarter. URI also updated its full-year financial targets.

Since that report, earnings estimates for 2011 have been on the rise. The Zacks Consensus Estimate for last year is up 7.2% in the past three months to $1.64 per share from $1.53. In fact, just the past 30 days have seen three upward revisions out of eight total estimates.

As for 2012, the Zacks Consensus Estimate is currently $2.43 per share, which suggests year-over-year profit growth of nearly 50%.

URI is scheduled to report again next week on January 25th. We are expecting fourth-quarter earnings at 58 cents, which is up 11.5% in three months and 5.4% in 30 days.

Mid December saw United Rentals announce a $4.2 billion deal to buy RSC Holdings, Inc., a holding company for the operating entity RSC Equipment Rental, Inc. According to the press release, the transaction is ” expected to accelerate United Rentals’ growth with industrial customers as well as provide a lower cost base and a less volatile revenue profile to better position the company through all phases of the business cycle.”

Wall Street liked the move, though there is some concern about the $2.3 billion in net debt that URI will assume as part of the deal.

United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of 541 rental locations in 48 states and 10 Canadian provinces. It serves construction and industrial customers, utilities, municipalities, homeowners and others.

 
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