Factors Setting the Tone for United Rentals' Q4 Earnings

United Rentals, Inc. URI is scheduled to report its fourth-quarter 2024 results on Jan. 29, after market close.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.In the last reported quarter, its adjusted earnings and revenues missed the Zacks Consensus Estimate by 51% and 0.02%, respectively. On a year-over-year basis, the top and bottom lines grew 6% and 0.6%, respectively.The company’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 2.5%.How Are Estimates Placed for URI?The Zacks Consensus Estimate for fourth-quarter adjusted earnings has decreased to $11.77 per share from $11.81 over the past 30 days. The projected figure indicates a 4.5% increase from the year-ago quarter’s earnings of $11.26 per share.The consensus estimate for revenues is pegged at $3.94 billion, indicating growth of 5.7% from the prior-year quarter’s level.United Rentals, Inc. Price and EPS Surprise United Rentals, Inc. price-eps-surprise | United Rentals, Inc. QuoteFactors at Play for United Rentals’ Quarterly ResultsRevenues: United Rentals is expected to close 2024 with continued revenue growth in the fourth quarter of 2024, driven by solid demand in both the construction and industrial sectors. Specialty rentals remain a key driver, having contributed 31% to third-quarter total revenues. The company continues to expand its offerings in power, HVAC, and modular solutions. Specialty rentals have outpaced general rentals for several years, and management expects this growth trajectory to continue into the final quarter of 2024.Infrastructure projects such as data centers, battery plants, and healthcare facilities will support steady equipment demand, particularly for large-scale projects.While local market challenges in General Rentals (which contributed 69% to third-quarter 2024 total revenues) and the normalization of used equipment margins present headwinds, the company’s diversified model and a strong pipeline of large projects provide confidence for continued profitable growth in the quarter.United Rentals has prioritized fleet productivity, which improved 3.5% in the third quarter. The company expects to maintain this momentum in the fourth quarter of 2024, leveraging telematics and predictive analytics to optimize fleet allocation. Time utilization has held steady, which is a positive sign that the company is efficiently deploying its equipment even in a slowing economic environment.However, seasonality will likely lead to a slight decline in fleet utilization compared to the third quarter, as colder weather typically slows construction activity in certain regions. Management will focus on maintaining pricing discipline to offset any seasonal softness.Earnings & Margins: Despite expected revenue growth, margin pressures are likely to persist in the fourth quarter. This is due to the normalization of the used equipment market, cost inflation and cold start investments. United Rentals has been witnessing record-used equipment sales. However, margins have declined as the market stabilizes, and this trend may continue into the fourth quarter. Segment-wise, our model predicts fourth-quarter revenues for General Rentals and Specialty to increase year over year by 0.7% to $2.83 billion and 21.2% to $1.11 billion, respectively.The Equipment Rentals business — which accounted for 86.7% of third-quarter total revenues — is likely to have witnessed a decent demand trend across the segments on the back of increased fleet productivity and average OEC. Apart from Equipment Rentals, other revenue sources include sales of rental equipment, new equipment, contractor supplies and service and other revenues.For the fourth quarter, we expect revenues from Equipment Rentals to increase 7.3% year over year to $3.35 billion. Revenues from Sales of Rental Equipment, New Equipment Sales, and Contractor Supplies Sales are expected to increase 0.03%, 19.7%, and 11.3%, respectively, from the year-ago quarter. However, revenues from Service & Other Revenue are expected to decline 34.7% from the year-ago period.We expect adjusted EBITDA to grow 3% year over year to $1.86 billion, but adjusted EBITDA margin to decline 120 basis points (bps) to 47.3% in the fourth quarter from 48.5% reported a year ago. Also, the gross margin is expected to contract 90 bps to 41% from 41.9% a year ago.What Our Model Indicates for URIOur proven model does not predict an earnings beat for United Rentals this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you can see below.Earnings ESP: URI has an Earnings ESP of -4.37%. You can uncover the best stocks they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks Poised to Beat on EarningsHere are some companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter.Weyerhaeuser WY has an Earnings ESP of +1.01% and a Zacks Rank of 1.WY reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 41.6%. The company’s earnings for the fourth quarter of 2024 are expected to decrease 56.3%.Sterling Infrastructure, Inc. STRL currently has an Earnings ESP of +2.99% and a Zacks Rank of 3.STRL’s earnings for the fourth quarter of 2024 are expected to increase 3.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 21.5%.PulteGroup, Inc. PHM currently has an Earnings ESP of +2.36% and a Zacks Rank of 3.PHM’s earnings for the fourth quarter of 2024 are expected to decrease 2.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 10.9%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Weyerhaeuser Company (WY): Free Stock Analysis Report PulteGroup, Inc. (PHM): Free Stock Analysis Report United Rentals, Inc. (URI): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks