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United Rentals: Analysts’ Views before Its Q1 Results

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Bullish recommendation

United Rentals (URI) received a consensus rating of ~2 and a consensus “buy” recommendation from the analysts polled by Reuters. Approximately 65% of the 20 analysts covering the stock have provided a bullish recommendation.

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Among the 20 analysts tracking United Rentals, eight recommended a “strong buy,” five recommended a “buy,” six recommended a “hold,” and one recommended a “sell.”

Analysts expect a massive surge in the industrial equipment rental company. Analysts’ consensus target price of $153.64 suggests an upside of 21.2% in one year from the current market price of $126.74.

Analysts seem to be bullish on the entire industrials sector (XLI). Analysts maintained a “buy” recommendation on most of United Rentals’ peers. The one-year target prices for CIRCOR International (CIR), Crane Company (CR), and Terex (TEX) suggests an upside of 13.2%, 18%, 16.7%, respectively.

On the valuation front, United Rentals stock is trading at a discount to the sector average and most of its peers. United Rentals, Crane, and Terex trade at PE ratios of 9.58x, 16.23x, and 22.39x, respectively. The industrials sector’s average PE ratio is 23.83x.

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Stock price performance

United Rentals shares have risen 23.6% year-to-date as of April 12. The shares have outperformed the broader market. Major US indexes including the NASDAQ, the S&P 500, and the Dow Jones have risen 20.3%, 16%, and 13.2%, respectively.

The optimism surrounding the stock is mainly due to its back-to-back quarters with better-than-expected quarterly results. Union Pacific beat the earnings estimates in 11 of the last 12 quarters. Union Pacific had a significant year-over-year improvement as well.

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