United Rentals (URI)

Equipment rental company United Rentals (NYSE:URI) missed Wall Street’s revenue expectations in Q4 CY2025 as sales rose 2.8% year on year to $4.21 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $17.05 billion at the midpoint. Its non-GAAP profit of $11.09 per share was 6.1% below analysts’ consensus estimates.

Company Overview

Owning the largest rental fleet in the world, United Rentals (NYSE:URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.

Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.

Competitors in the equipment rental industry include Sunbelt Rentals (LSE:AHT), Herc Holdings (NYSE:HRI), and H&E Equipment Services (NASDAQ:HEES).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, United Rentals grew its sales at an exceptional 13.5% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. United Rentals’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6% over the last two years was well below its five-year trend.

This quarter, United Rentals’s revenue grew by 2.8% year on year to $4.21 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its newer products and services will not accelerate its top-line performance yet.

United Rentals’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 40.5% gross margin over the last five years. Said differently, roughly $40.54 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

United Rentals’s gross profit margin came in at 37.8% this quarter, marking a 2.6 percentage point decrease from 40.4% in the same quarter last year. United Rentals’s full-year margin has also been trending down over the past 12 months, decreasing by 2.2 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

United Rentals has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 25.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, United Rentals’s operating margin rose by 1.2 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, United Rentals generated an operating margin profit margin of 25%, down 1.5 percentage points year on year. Since United Rentals’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

United Rentals’s EPS grew at an astounding 19.2% compounded annual growth rate over the last five years, higher than its 13.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into United Rentals’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, United Rentals’s operating margin declined this quarter but expanded by 1.2 percentage points over the last five years. Its share count also shrank by 12.4%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For United Rentals, its two-year annual EPS growth of 1.6% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, United Rentals reported adjusted EPS of $11.09, down from $11.59 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects United Rentals’s full-year EPS of $42.12 to grow 12.5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

United Rentals has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 14.5% over the last five years.

Taking a step back, we can see that United Rentals’s margin dropped by 2 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

United Rentals’s free cash flow clocked in at $989 million in Q4, equivalent to a 23.5% margin. This result was good as its margin was 3.1 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although United Rentals hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 14.3%, impressive for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Uneventfully, United Rentals’s ROIC has stayed the same over the last few years. Given the company’s underwhelming financial performance in other areas, we’d like to see its returns improve before recommending the stock.

United Rentals reported $459 million of cash and $15.35 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $7.33 billion of EBITDA over the last 12 months, we view United Rentals’s 2.0× net-debt-to-EBITDA ratio as safe. We also see its $350 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its EPS missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 5.1% to $857.50 immediately following the results.

Updated: January 28, 2026 at 5:27 PM EST

Are you wondering whether to buy United Rentals or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

When it comes to United Rentals’s business quality, there are some positives, but it ultimately falls short. First off, its revenue growth was exceptional over the last five years. And while United Rentals’s organic revenue growth has disappointed, its impressive operating margins show it has a highly efficient business model.

United Rentals’s P/E ratio based on the next 12 months is 19.1x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $1,017 on the company (compared to the current share price of $857.50).