United Rentals Stock Down on Q4 Earnings Miss, Revenue Beat

United Rentals, Inc. URI witnessed a 0.7% dip in its shares during the after-hours trading yesterday, following the release of the mixed fourth-quarter 2024 results. The company’s earnings per share (EPS) missed the Zacks Consensus Estimate, but revenues surpassed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.See the Zacks Earnings Calendar to stay ahead of market-making news.The company reported fourth-quarter records in revenues, EBITDA and earnings. A strong focus on safety and productivity for customers supported its 2024 performance and remains a key part of the company’s long-term strategy to create value for shareholders.The company expects growth in 2025, supported by strong demand carried into the new year and customer optimism. It remains focused on driving profitable growth, maintaining strong free cash flow and delivering shareholder returns. The company is also focused on completing the acquisition of H&E.United Rentals’ Quarterly HighlightsAdjusted EPS of $11.59 missed the Zacks Consensus Estimate of $11.77 by 1.5%. The reported figure, however, increased 2.9% from the prior-year adjusted figure of $11.26 per share.Total revenues were $4.095 billion in the quarter, surpassing the consensus mark of $3.942 billion by 3.9%. On a year-over-year basis, the top line grew 9.8%.United Rentals, Inc. Price, Consensus and EPS Surprise United Rentals, Inc. price-consensus-eps-surprise-chart | United Rentals, Inc. QuoteEquipment Rentals revenues increased 9.7% from the year-ago quarter to $3.422 billion, marking a record high for the fourth quarter. Fleet productivity inched up 4.3% year over year, and the same increased 2%, excluding the impact of the Yak acquisition. Average original equipment at cost increased 4.1% year over year.Used equipment sales (or sales of rental equipment) increased 3.2% from a year ago to $452 million. This produced an adjusted gross margin of 48.9%, which contracted 640 basis points (bps). The decrease in the year-over-year adjusted gross margin primarily resulted from the ongoing normalization of the used equipment market, which includes pricing adjustments.URI’s Segment DiscussionGeneral Rentals: This segment registered 2.2% year-over-year growth in rental revenues to a fourth-quarter record of $2.339 billion. Rental gross margin contracted 170 bps year over year to 37.4%, indicating the impact of inflation and normal cost variability, including higher insurance expenses and certain other costs.Specialty: Segmental rental revenues improved 30.5% year over year to a fourth-quarter record of $1.083 billion. Excluding the impact of the Yak acquisition, rental revenues grew 17.8% year over year. Rental gross margin, however, contracted 170 bps year over year to 45.5%, indicating higher depreciation expense related to the Yak acquisition.URI’s MarginsThe company’s total equipment rentals’ gross margin contracted 130 bps year over year to 40%.Adjusted EBITDA for the reported period grew 5% year over year to $1.9 billion. Our estimate for the metric was $1.864 billion. However, the adjusted EBITDA margin contracted 210 bps to 46.4%. The decline in the adjusted EBITDA margin primarily stemmed from a decrease in the adjusted gross margin related to sales of used equipment.URI’s 2024 HighlightsFor the full year, the company generated total revenues of $15.345 billion (up 7.1%) and adjusted earnings of $43.17 per share (up 6% from 2023).Adjusted EBITDA rose 4.4%, but adjusted EBITDA margin contracted 110 bps to 46.7% year over year.Balance Sheet of URIUnited Rentals had cash and cash equivalents of $457 million as of Dec. 31, 2024, up from $363 million at 2023-end. Total liquidity was $2.845 billion at 2024-end. Long-term debt at the fourth quarter of 2024-end was $12.23 billion, up from $10.05 billion at 2023-end.On Dec. 31, 2024, the net leverage ratio was 1.8x compared with 1.6x on Dec. 31, 2023. Return on invested capital was 13% for the trailing 12 months ended on Dec. 31, 2024.During 2024, net cash from operating activities decreased 3.4% year over year to $4.546 billion. Free cash flow fell 10.8% year over year to $2.065 billion for the same period.In 2024, the company returned $1.934 billion to its shareholders, including $1.5 billion through share repurchases and $434 million in dividends.URI’s board of directors approved a 10% increase in the quarterly dividend and declared a dividend of $1.79 per share, payable on Feb. 26, 2025, to its stockholders of record as of Feb.12.URI’s 2025 GuidanceTotal revenues are expected to be in the range of $15.1-$15.3 billion. Adjusted EBITDA is anticipated to be between $7.115 billion and $7.215 billion.Net rental capital expenditure is now anticipated to be in the range of $2.2-$2.5 billion (after gross purchases of $3.65 billion to $3.95 billion) compared with $2.235 billion after gross purchases of $3.756 billion in 2024.Net cash provided by operating activities is anticipated to be in the range of $4.5-$5.1 billion. Free cash flow (excluding the impact of merger and restructuring-related payments) is expected to be in the range of $2-$2.2 billion.URI Stock’s Zacks RankCurrently, United Rentals carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Other Recent Construction ReleasesKB Home KBH reported impressive fiscal fourth-quarter 2024 results, wherein both revenues and earnings surpassed expectations. On a year-over-year basis, both metrics increased, highlighting its resilience in a fluctuating housing market.KB Home is optimistic about fiscal 2025. However, challenges such as mortgage rate headwinds and potential regulatory shifts could temper the pace of growth. Still, the company’s robust investments in land and its “Built to Order” model provide a cushion against market uncertainties.D.R. Horton, Inc. DHI reported first-quarter fiscal 2025 (ended Dec. 31, 2024) results, with earnings and revenues beating Zacks Consensus Estimate but decreasing on a year-over-year basis.Despite rising home inventories, the supply of affordable homes remains constrained, while favorable demographics continue to drive housing demand. To address affordability challenges and stimulate sales, the company leveraged incentives such as mortgage rate buydowns. Additionally, D.R. Horton focused on offering smaller, affordable floor plans to align with the needs of cost-conscious homebuyers.NVR, Inc. NVR reported impressive fourth-quarter 2024 results, with earnings and Homebuilding revenues surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.The quarterly performance showed strong growth in settlements. Although new orders decreased in the quarter, the average selling price increased.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want 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 KB Home (KBH): Free Stock Analysis Report D.R. Horton, Inc. (DHI): Free Stock Analysis Report NVR, Inc. 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