The Q2 2014 earnings report for equipment rental stock United Rentals, Inc (NYSE: URI), a peer or competitor of Essex Rental Corp (NASDAQ: ESSX) and H&E Equipment Services, Inc (NASDAQ: HEES), is scheduled for after the market closes on Wednesday. Aside from the United Rentals earnings report, it should be said that the Essex Rental Corp reported Q4 2013 earnings on May 7th while the estimated release date for the H&E Equipment Services, Inc Q2 2014 earnings report is August 4th. However, United Rentals' shares rose after its last earnings report plus analysts have issued bullish research notes since then.
What Should You Watch Out for With the United Rentals, Inc Earnings Report?First, here is a quick recap of United Rentals' recent earnings history from Yahoo! Finance:
| EPS Est | 1.01 | 1.60 | 1.47 | 0.71 |
| EPS Actual | 1.12 | 1.63 | 1.59 | 0.90 |
| Difference | 0.11 | 0.03 | 0.12 | 0.19 |
| Surprise % | 10.90% | 1.90% | 8.20% | 26.80% |
Back in mid April, United Rentals reported first quarter total revenue of $1.178 billion which includes a 9.7% increase in rental revenue (including owned equipment rental revenue, re-rent revenue and ancillary items) to $1.005 billion verses revenue of $1.100 billion and $916 million, respectively, for the same period last year. Within rental revenue, owned equipment rental revenue increased 9.1%, reflecting year-over-year increases of 7.6% in the volume of equipment on rent and 4.3% in rental rates. On a GAAP basis, the company reported first quarter net income of $60 million, or $0.56 per diluted share, compared with $21 million, or $0.19 per diluted share, for the same period last year. The CEO commented:
"We're off to a strong start in 2014, with notable year-over-year growth in rates, time utilization and volume. Our adjusted EBITDA margin improved to over 44%, a first quarter record. Despite the headwind of a harsh winter, we strategically managed our business to capitalize on pockets of opportunity. We now see solid demand in almost every market, giving us further confidence in our full year outlook."
And:
"The feeling in the field is upbeat -- our customers and managers are bullish about business prospects, including the long-awaited recovery in commercial construction. We plan to leverage our scale in this environment and bring in about $750 million of fleet in the second quarter. The integration of our National Pump acquisition is going well, and we've opened three new specialty branches in trench safety, power and HVAC. These are just a few of the many growth initiatives that will drive our short and long-term performance."
This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenues of $1.36 billion and EPS of $1.46 - slightly down from the EPS of $1.47 expected seven days ago and the EPS of $1.41 expected ninety days ago.
On the news front and at the beginning of this month, KeyBanc increased its price target on United Rentals as the firm expects the company to benefit from strong project activity in the Gulf Coast region plus they think this trend is underappreciated by investors. They kept a Buy rating on the shares.
In early June, Jefferies also raised its price target for United Rentals shares to $125 citing positive US equipment residual trends and the improving macro environment. They believe growth is in the "early innings" and reiterated a Buy rating on United Rentals.
What do the United Rentals, Inc Charts Say?The latest technical chart for United Rentals shows a stock in a strong uptrend:
United Rentals has also been a strong long term performer while H&E Equipment Services has also put in a good performance but Essex Rental Corp has been an underperformer:
The technical chart for Essex Rental Corp shows shares starting to head downward in January while H&E Equipment Services, Inc started to trend downward in April.
Although United Rentals' shares have been strongly trending upward, investors might want to keep in mind the direction shares of Essex Rental Corp and H&E Equipment Services are heading in. With that in mind, the United Rentals earnings report and any subsequent earnings call will be worth paying attention to for any signs that a reversal might be coming.
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