United Rentals (URI, Financial) has seen a daily gain of 3.07%, with a three-month gain of 45.21%. Its Earnings Per Share (EPS) stands at 32.86. But the question that arises is, is the stock Fairly Valued? This article aims to provide a detailed valuation analysis of United Rentals, encouraging readers to delve into the subsequent analysis.
Company Introduction
United Rentals Inc (URI, Financial), the world's largest equipment rental company, primarily operates in the United States and Canada, where it holds approximately 17% share in a highly fragmented market. The company's catalog, with a fleet size of $19.6 billion, extends to a range of specialty equipment and other items that can be rented for indefinitely long periods. Comparing the stock price with the GF Value, an estimation of fair value, paves the way for a profound exploration of the company's value.
GF Value: A Summary
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. It is calculated based on historical multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
United Rentals, at its current price of $491.17 per share, has a market cap of $33.50 billion, and is believed to be fairly valued according to our GF Value estimation. This suggests that the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. United Rentals has a cash-to-debt ratio of 0.02, which is worse than 95.97% of 1042 companies in the Business Services industry. This indicates that the financial strength of United Rentals is poor.
Profitability and Growth
United Rentals has been profitable 10 over the past 10 years. Its operating margin is 27.51%, which ranks better than 92.69% of 1040 companies in the Business Services industry. This indicates strong profitability.
The company's growth is also noteworthy. The 3-year average annual revenue growth rate of United Rentals is 10.9%, which ranks better than 69.46% of 979 companies in the Business Services industry.
ROIC vs WACC
Comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also evaluate a company's profitability. United Rentals's ROIC is 12.6 while its WACC came in at 11.53.
Conclusion
In summary, the stock of United Rentals (URI, Financial) is believed to be fairly valued. The company's financial condition is poor, but its profitability is strong. Its growth ranks better than 55.2% of 846 companies in the Business Services industry. To learn more about United Rentals stock, you can check out its 30-Year Financials here.
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