United Rentals (URI) is scheduled to report its fourth-quarter results on January 23. The equipment rental company has an impressive record of beating analysts’ earnings estimates. The company beat analysts’ consensus estimates in the past seven quarters with an average positive surprise of 7.7%.
United Rentals could continue its trend of reporting better-than-expected bottom-line results and witness strong double-digit quarterly earnings growth in the fourth quarter. The company registered over 45% earnings growth in all of the previous three quarters in 2018. For the fourth quarter, analysts expect an adjusted EPS of $4.89 for United Rentals, which implies an increase of ~46% YoY (year-over-year).
Analysts expect higher revenues and cost savings through the implementation of the Project XL initiative to drive United Rental’s fourth-quarter earnings higher. The reduced tax rate could also help the bottom-line results.
For the fourth quarter, the company expects to report revenues of $2.22 billion—15.5% higher than the same quarter the previous year. Double-digit revenue growth will likely be driven by strong construction activities across the commercial, infrastructure, and industrial sectors. Acquisitions and higher rental rates and volumes could help the top-line growth.
The company had made two important acquisitions—BakerCorp International and BlueLine Rental, which will likely bring in incremental revenues. Strong economic growth, as reflected in improving GDP rates, should continue to drive United Rentals’ volume and rental rates higher. The company witnessed rental rates and volume growth in all of the previous three quarters in 2018.
United Rentals’ Project XL strategy, which is basically a combination of revenues and cost initiatives to drive profits, could boost the fourth-quarter bottom-line results. Analysts expect the effective tax rate for the quarter to fall to 25.1% from 38.2% in the same quarter the previous year.
Fiscal 2018 expectations
For fiscal 2018, analysts expect the EPS to grow 55% YoY to $16.38 due to higher revenues, improved operating efficiency, and lower taxes. The revenues in fiscal 2018 will likely increase 19.6% YoY to $7.94 billion.