United Rentals (United Rentals) ROC %

: 13.05% (As of Dec. 2023)

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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. United Rentals's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 13.05%.

As of today (2024-04-23), United Rentals's WACC % is 12.37%. United Rentals's ROC % is 12.30% (calculated using TTM income statement data). United Rentals earns returns that do not match up to its cost of capital. It will destroy value as it grows.

United Rentals ROC % Historical Data

The historical data trend for United Rentals's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

United Rentals Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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9.29

7.97

9.36

11.52

12.26

United Rentals Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %	Get a 7-Day Free Trial															13.99	10.01	12.41	13.60	13.05

United Rentals ROC % Calculation

United Rentals's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	3855 * ( 1 - 24.51% )	/	( (22553	+	24924)	/ 2 )
=	2910.1395	/	23738.5
=	12.26 %

where

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	24183	-	1524	-	( 106	-	max(0, 2445	-	2723	+	106	))
=	22553

	Invested Capital		(A: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	25589	-	1369	-	( 363	-	max(0, 3637	-	2933	+	363	))
=	24924

United Rentals's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	4268 * ( 1 - 24.72% )	/	( (24302	+	24924)	/ 2 )
=	3212.9504	/	24613
=	13.05 %

where

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	25832	-	2225	-	( 284	-	max(0, 3673	-	2978	+	284	))
=	24302

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	25589	-	1369	-	( 363	-	max(0, 3637	-	2933	+	363	))
=	24924

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

United Rentals (NYSE:URI) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, United Rentals's WACC % is 12.37%. United Rentals's ROC % is 12.30% (calculated using TTM income statement data). United Rentals earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

United Rentals ROC % Related Terms

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United Rentals (United Rentals) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » United Rentals Inc (NYSE:URI) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

UR3:Germany U1RI34:Brazil

Address

100 First Stamford Place, Suite 700, Stamford, CT, USA, 06902

Website

https://www.unitedrentals.com

United Rentals is the world's largest equipment rental company. It principally operates in the United States and Canada, where it commands approximately 17% share in a highly fragmented market. It serves three end markets: general industrial, commercial construction, and residential construction. Like its peers, United Rentals historically has provided its customers with equipment that was intermittently used, such as aerial equipment and portable generators. As the company has grown organically and through hundreds of acquisitions since it went public in 1997, its catalog (fleet size of $21 billion) now includes a range of specialty equipment and other items that can be rented for indefinitely long periods.

Executives

Terri L. Kelly	director	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
Michael D Durand	officer: EVP, Chief Operating Officer	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
Dale A Asplund	officer: Senior V.P.-Business Services	C/O BRIGHTVIEW HOLDINGS, INC., 980 JOLLY ROAD, SUITE 300, BLUE BELL PA 19422
Anthony S. Leopold	officer: SVP	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
Joli L. Gross	officer: SVP, General Counsel	TWO AMERICAN LANE, GREENWICH CT 06831
William E. Grace	officer: VP, Interim CFO	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
Matthew John Flannery	officer: Sr. Vice President- Operations	C/O UNITED RENTALS, INC, 100 FIRST STAMFORD PL, STAMFORD CT 06902
Craig Adam Pintoff	officer: Sr. V.P,, Gen. Counsel & H.R.	C/O UNITED RENTALS, INC, 100 FIRST STAMFORD PL, STE 700, STAMFORD CT 06902
Andrew B. Limoges	officer: VP, Controller	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
Jose B Alvarez	director	STOP & SHOP, 1385 HANCOCK STREET, QUINCY MA 02169
Francisco J Lopez-balboa	director	3280 PEACHTREE ROAD, N.W., ATLANTA GA 30305
Jessica Graziano	officer: Vice President, Controller	C/O UNITED RENTALS, INC, 100 FIRST STAMFORD PL, STAMFORD CT 06902
Shiv Singh	director	C/O UNITED RENTALS, INC., 100 FIRST STAMFORD PLACE, SUITE 700, STAMFORD CT 06902
De Shon Larry D	director	6 SYLVAN WAY, PARSIPPANY NJ 07054
Filippo Passerini	director	C/O UNITED RENTALS, INC, 100 FIRST STAMFORD PL, STAMFORD CT 06902