Will United Rentals (URI) Beat Q3 Earnings Estimates?
United Rentals, Inc. (URI) is set to release third-quarter 2014 results after the market close on Oct 15. In the last quarter, the Stamford, CT-based company delivered a 3.85% positive earnings surprise on the back of growth in both equipment rentals and sales of new equipment, services and other revenues, and sales of rental equipment..
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
During the first half of 2014, the company repurchased $228 million worth of shares under its $500 million share repurchase program. United Rentals plans to complete the program by Apr 2015. Further share repurchases will provide support to the stock.
For fiscal 2014, United Rentals increased the lower end of its revenue guidance range from $5.45 billion to $5.55 billion. Adjusted EBITDA guidance for the full year is in the range of $2.65–$2.70 billion, up from the previously projected range of $2.55–$2.65 billion. The company expects an increase in rental rates of approximately 4.5% year over year (increased from the previous expectation of 4%) and time utilization of around 68.5% (unchanged).
United Rentals will benefit from the acquisition of National Pump. The deal marks United Rentals' venture into the pump rental sector, catapulting it to the position of the second largest provider of pump rentals in North America. The deal is expected to be accretive to United Rentals’ free cash flow and earnings per share in 2014. In addition, United Rentals acquired the Power and HVAC (Heating, ventilation and air conditioning) assets of Blue-Stream Services, LLC in May that will help in expanding the company’s footprint in the Gulf region while offering significant cross-selling opportunities.
Notably, the company will continue to focus on reducing the cycle time for renting equipment, improving accuracy, service quality and efficiency, and cost control, which will lead to an increase in gross margin. Additionally, the company is poised to benefit from a rebound in non-residential construction. United Rentals will also benefit from the implementation of growth strategies, higher rental rates, free cash flow generation, returning cash to shareholders and integrating acquisitions.
Earnings Whispers
Our proven model shows that United Rentals is likely to beat earnings estimate this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 or 2 or 3 for this to happen. United Rentals has the right combination of the two key components.
Zacks ESP: United Rentals currently has an Earnings ESP of +12.68%. This is because the Most Accurate estimate stands at $2.31, while the Zacks Consensus Estimate is pegged at $2.05.
Zacks Rank: United Rentals carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
Stocks That Warrant a Look
Here are some other companies belonging to the building and construction-misc industry you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Potlatch Corporation (PCH) has an earnings ESP of 1.18% and a Zacks Rank #2 (Buy).
NCI Building Systems Inc. (NCS) has an earnings ESP of +5.26% and a Zacks Rank #3 (Hold).
Quanex Building Products Corporation (NX) has an earnings ESP of +5.00% and a Zacks Rank #3.
Read the Full Research Report on NCS
Read the Full Research Report on NX
Read the Full Research Report on PCH
Read the Full Research Report on URI
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