What’s Next For URI Stock?

January 15th, 2025 by Trefis Team
URI: United Rentals logo
URI
United Rentals

United Rentals Stock (NYSE: URI), the largest equipment renting company in the world offering services to construction and industrial companies, manufacturers, utilities, etc., has seen its stock rally 6% on Tuesday Jan 14, after the company announced its plans to acquire H&E Equipment Services (NASDAQ: HEES). United Rentals offered a massive premium of over 2x for H&E. HEES stock was trading at $44 on Monday, January 13, and United Rentals has offered a price of $92 per share for the company, reflecting a total enterprise value of $4.8 billion, including $1.4 billion of debt. H&E will add 64,000 units to United Rentals’ existing fleet of over a million units. Not only will this acquisition bolster United Rentals Revenue, it is expected to generate $250 million in cost synergies over the coming years. 

This development has boded well for both stocks. Admirably, URI stock has generated better returns than the broader market in each of the last four years. Similarly, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and geopolitical tensions, could URI see a strong jump? It appears that investors are optimistic about United Rentals’ business. The company is benefiting from an increase in overall industrial spending and construction, as well as better fleet productivity. URI stock has seen a notable rise in its P/S ratio, from 1.9x in 2020 to 3.4x trailing revenues now. Furthermore, the $850 average of analysts’ price estimate implies an upside of over 15% from current levels of $730.

While URI stock may have some more room for growth, it is helpful to see how United Rentals’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Returns Jan 2025
MTD [1]		 Since start
of 2024 [1]		 2017-25
Total [2]
 URI Return 4% 28% 607%
 S&P 500 Return -1% 22% 161%
 Trefis Reinforced Value Portfolio 0% 16% 749%
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[1] Returns as of 1/15/2025
[2] Cumulative total returns since the end of 2016

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