Factors Setting the Tone for United Rentals' Q2 Earnings

United Rentals, Inc. URI is scheduled to report its second-quarter 2025 results on July 23, after market close.

In the last reported quarter, the company’s adjusted earnings per share (EPS) beat the Zacks Consensus Estimate by 0.2% and revenues surpassed the same by 4.4%. On a year-over-year basis, revenues increased 6.7%, but earnings declined 3.2%.

The company’s earnings surpassed estimates in two of the trailing four quarters and missed on two occasions, with a negative average surprise of 1.2%.

How Are Estimates Placed for URI Stock?

The Zacks Consensus Estimate for second-quarter adjusted earnings has decreased to $10.54 per share from $10.59 over the past 30 days. The projected figure indicates a 1.5% decrease from the year-ago quarter’s earnings of $10.70 per share.

United Rentals, Inc. Price and EPS Surprise

United Rentals, Inc. price-eps-surprise | United Rentals, Inc. Quote

The consensus estimate for revenues is pegged at $3.91 billion, indicating growth of 3.6% from the prior-year quarter’s level.

Factors at Play for United Rentals’ Quarterly Results

Revenues: United Rentals is expected to register revenue growth in the second quarter of 2025, driven by solid demand in both the construction and industrial sectors. Ongoing demand from large infrastructure and industrial projects is expected to have driven growth in United Rentals’ second-quarter revenues. Large-scale projects, such as developments in data centers, pharmaceuticals, airports and industrial manufacturing facilities, are expected to have acted as a tailwind for the company’s top-line performance.

Specialty rentals, which carry higher returns and are a focus area for URI’s expansion strategy, are expected to have contributed to its top line, both organically and through cold-starts, which added capacity in new markets.

While local market challenges in General Rentals (which contributed 70.7% to 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.

Segment-wise, our model predicts second-quarter revenues for General Rentals and Specialty to increase 2.2% to $2.26 billion and 6.8% to $1.07 billion, respectively, on a year-over-year basis.

The Equipment Rentals business, which accounted for 84.6% of second-quarter 2025 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 & Other revenues.

For the second quarter, we expect revenues from Equipment Rentals to increase 3.7% year over year to $3.33 billion. New Equipment Sales are expected to increase 24.9% from the year-ago quarter. However, sales of Rental Equipment and Contractor Supplies are expected to decline 0.4% and 7%, respectively, year over year to $363.5 million and $39.1 million. Service & Other revenues are expected to increase 20.4% from the year-ago period to $108.4 million.

Earnings & Margins: Despite expected revenue growth, margin pressures are likely to have persisted in the second quarter. This is due to the increased proportion of lower-margin revenue sources such as used equipment sales and new equipment sales. Additionally, growth in ancillary services and re-rentals, while positive for revenues, is also expected to have contributed to margin pressure given the inherently lower profitability. Also, ongoing macro uncertainties and lingering inflationary pressures are expected to have compressed margins.
 
We expect adjusted EBITDA to grow 1.5% year over year to $1.8 billion, but adjusted EBITDA margin to decline 110 basis points (bps) to 45.8% in the second quarter from a year ago. Also, the gross margin is expected to contract 100 bps to 39.2% from a year ago.

What Our Model Indicates for URI

Our proven model predicts 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, which is exactly the case here, as elaborated below.

URI’s Earnings ESP: URI has an Earnings ESP of +5.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank of URI: The company currently has a Zacks Rank #2.

Other Stocks Poised to Beat Earnings

Here are some other companies in the Zacks Construction sector which, too, according to our model, have the right combination of elements to post an earnings beat.

Primoris Services Corporation PRIM has an Earnings ESP of +5.33% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings beat estimates in each of the last four quarters, the average surprise being 44.8%. Primoris Services’ earnings for the second quarter of 2025 are expected to increase 1.9%.

MasTec, Inc. MTZ has an Earnings ESP of +0.09% and a Zacks Rank of 1 at present.

For the quarter to be reported, MasTec’s earnings are expected to increase 46.9%. MasTec’s earnings beat estimates in each of the last four quarters, the average surprise being 26%. 

Armstrong World Industries, Inc. AWI currently has an Earnings ESP of +1.71% and a Zacks Rank of 3.

The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.5%. Armstrong World’s earnings for the second quarter of 2025 are expected to increase 8%.

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This article originally published on Zacks Investment Research (zacks.com).

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