Growth stock United Rentals is in a cup-with-handle base ahead of its earnings report Wednesday after the close. It is today's selection for IBD 50 Stocks To Watch.
Shares have pulled back in light volume as they carve the handle. The buy point is 471.82, according to IBD MarketSmith.
For the second quarter, analysts polled by FactSet see earnings per share of $9.01, which would be a 15% increase from a year ago, with sales of $3.5 billion, up 25%.
For the full year, FactSet's consensus shows earnings per share of $39.46, an increase of 21%.
In the first quarter, sales grew 30% to $3.3 billion as EPS of $7.95 rose 39%. The company maintained its full-year outlook for sales of $13.7 billion to $14.2 billion.
Rental revenue increased 26% from the previous year to $2.7 billion, while used-equipment sales surged 83.9% as the company normalized sales volume after its acquisition of Ahern Rentals in December 2022.
The $2 billion all-cash acquisition added 106 rental locations to United Rentals' network. URI saw the deal as accretive to adjusted earnings and free cash flow in the first year after the deal closed.
URI's Composite Rating is a near-perfect 97, the same as its EPS Rating. The Relative Strength Rating is not far behind at 91. The company has posted sales growth of 18% to 30% over the past seven quarters, and EPS growth of 22% to 69%, according to MarketSmith.
The growth stock leads the commercial services leasing group.
Growth Stock Holds 26% Gain
United Rentals rents through a network of over 1,500 locations across North America, Europe, Australia and New Zealand.
URI rents its equipment to construction and industrial companies, utilities and homeowners. The company also has a specialty rental segment that provides equipment for construction, such as trench safety tools, power tools and modular office space.
The growth stock has gained 26% so far this year, outperforming the S&P 500's 19%. Most of URI's 2023 gains came in January and February and a big rebound that began in May.
Mutual funds own 57% of total shares outstanding. Fidelity Contrafund (FCNTX) has a stake in the rental company. Exchange traded funds holding the stock include the S&P 500 SPDR ETF and the Industrial Select Sector SPDR Fund.
Please follow VRamakrishnan on Twitter for more news on the stock market today.
