Since September 2021, the S&P 500 has delivered a total return of 70.6%. But one standout stock has more than doubled the market - over the past five years, United Rentals has surged 191% to $995.42 per share. Its momentum hasn’t stopped as it’s also gained 33.9% in the last six months thanks to its solid quarterly results, beating the S&P by 19.7%.
Is it too late to buy URI? Find out in our full research report, it’s free.
Why Does URI Stock Spark Debate?
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, United Rentals’s sales grew at an exceptional 13.8% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
United Rentals’s EPS grew at 19.5% compounded annual growth rate over the last five years, higher than its 13.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to Be Careful:
New Investments Fail to Bear Fruit as ROIC Declines
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
On average, United Rentals’s ROIC decreased by 1.3 percentage points annually each year over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.
Final Judgment
United Rentals’s merits more than compensate for its flaws, and with its shares outperforming the market lately, the stock trades at 18.8× forward P/E (or $995.42 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
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