URI - Embedded Expectations Analysis - 2018 08 20
United Rentals, Inc. (URI:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 13.8x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about their acquisition strategy and their ability to drive organic growthSpecifically, management may lack confidence in their ability to gain knowledge and access from their acquisitions, and achieve non-acquisition based organic volume growth. They may also lack confidence in their ability to create a full fluid solutions business through their acquisition of Bakercorp, and might be concerned about their ability to create synergies through their acquisition of Industrial Rental Services and Cummins Assets. Also, they appear concerned about wage inflation and may lack confidence in their ability to sustain returns through their share repurchase program
United Rentals is an equipment rental company that operates throughout the United States and Canada, and Europe. The company's general rentals segment includes the rental of construction, aerial and industrial equipment, general tools and light equipment, and related services and activities. This segment's customers include construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The company's trench, power and fluid solutions segment includes the rental of construction products and related services. This segment consist of: Trench Safety region, Power and Heating, Ventilating and Air Conditioning region; and Fluid Solutions and Fluid Solutions Europe regions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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