In the economy, which has seen significant jumps in consumer and business optimism in the economy, companies such as United Rentals Inc. (NYSE:URI), probably feeling confident in their prospects.
If you happen to be the URI of the owner of shares, you must be very excited. URI just reported an amazing profit, exceeding forecasts of 44 cents a share. Let’s exactly what URI suggests, and why his earnings were so great. Then we will see if the URI, the stock is still quite a reasonable price to jump.
Shares of URI controlled the income from the rental of the equipment in two divisions. General Bicycle handle General construction and industrial equipment offered by these types of companies as well as manufacturers, utilities, municipalities and homeowners. Trench, pump and power segment is involved in the rental of specialty construction products, including equipment to ensure the safety of the trench, power and HVAC equipment, and pumps used primarily in the energy and petrochemical customers. He also sells both new and used equipment and has a little less than 1,000 places in North America.
I love the trail!
Rental revenue rose to 1.46 billion dollars, compared to about 25% from last year’s 1.17 billion USD. Total revenue increased by almost 30% from 1.36 billion to $ 1.73 billion. Net income exploded from 27 dollars per diluted share to $1.78 per share.
The room is clean, it’s just amazing, because it reflects a 26% increase in volume of equipment on rent, but only a 1.9% increase in rental rates. Thus, URI was seeing a significant increase in demand still keeps his prices are just about where they were.
If we look at trenches, power and pump revenue market, we see it has increased 36.5% year on year, and it’s basically on the same database repository. It’s just amazingly well. CEO URI stated that “almost all indicators show the market growth that supports our Reaffirming our Outlook for the year.”
That worldview includes the total income of between $7.3 billion and $7.6 billion, between $2.6 billion and $2.8 billion, operating cash flow, as well as between $1.3 billion and $1.4 billion of available cash.
Indeed, for the first quarter free cash flow amounted to 516 million us dollars. Meanwhile, URI shares continues to benefit from better margins for their profits on invested capital. This figure rose by 100 basis points to 9.4%, compared with 8.4% last year.
Stock of URI do not keep much money on hand. Its cash balance currently sits at 278 million. Although its debt sits at $8.4 billion, debt service only works about 5%. The Board of Directors approved a stock repurchase program for $1 billion I would prefer to instead see that money go to debt repayment.
Shares of United rentals is trading at only 20 times earnings. Approximately 10% of net profit per share for this year, but the annual growth is tied almost 16%, there is a gap in terms of what can be considered reasonable ratio R/E.
The bottom line on the URI
I don’t give a URI to the shares of any particular award, because it does not have sustainable cash flow, cash in hand, or a global brand, what makes it worthy of any such payment. Consequently for stock trading at 20 times earnings next year, long-term package increase by only 16%, the URI of the action feels a little expensive for me at the moment.
Lawrence Meyers is the CEO of PDL capital, a specialty lender focusing on consumer loans and a portfolio Manager of liberty for www.thelibertyportfolio.com. He does not have mentioned shares. He has an experience of 23 years in the stock market and has written over 2000 articles about investing. Lawrence Meyers can be reached at [Email protected]