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URI – Market expectations are for Uniform ROA to decline, but management is confident about productivity, secular tailwinds, and customer sentiment

June 3, 2021

  • United Rentals, Inc. (URI:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.6x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about fleet productivity, secular tailwinds, and customer sentiment
  • Specifically, management is confident easy comps imply improved fleet productivity for the year, cost of capital inflation could drive secular penetration in the rental industry, and that adjusted EPS was up by $0.10 compared to Q1 2020. Additionally, they are confident customer sentiment is recovering to pre-pandemic levels as customers have a significant amount of work in hand, that they will adjust their headcount model inputs if they have a longer period of peak performance, and that the support their P&L gets in an inflationary environment will come from productivity performance