United Rentals (URI), the largest equipment rental company in the world, has an integrated network of more than 550 rental locations in 48 states and Canada offering such items as forklifts, bulldozers, excavators, welders, and many others. Customers include construction and industrial companies, utilities, municipalities, and homeowners.
In their latest quarter (announced the day before yesterday), the company reported earnings of 0.36/share, $0.30 better than estimates; revenues rose 25% year/year to $656 million versus the $610 million consensus. During the earnings conference call, management was very bullish about the outlook for 2012, expecting significant synergies from their acquisition of RSC holdings — expected to close at the end of April. On valuation, the stock has a forward P/E of 11 on forecast earnings per share growth of 37%, resulting in a PEG of 0.3, a reasonable valuation.
Technically, the stock is breaking out of a flat base after a strong run in the second half of 2011.
While the overall stock market remains in a corrective phase, this stock offers a decent risk/reward with an entry in the 45 area and a stop-loss around 43 (the upper end of the eps-related up-gap in price on April 18, 2012). A way to play it would be to enter half a position now and then wait to see how it holds up versus the rest of the market.