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A month has gone by since the last earnings report for United Rentals (URI). Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is United Rentals due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
United Rentals reported second-quarter 2025 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. On a year-over-year basis, the top line increased, but the bottom line declined.
The company reported record second-quarter revenues and adjusted EBITDA, driven by strong demand across construction and industrial end-markets. This performance reflects continued momentum from the prior quarter. Growth in both general rentals and specialty segments supported the results. Customer optimism, healthy backlogs and seasonal activity contributed to the overall strength.
Going forward, United Rentals expects to see continued growth in large projects and strong performance in the specialty segment. Based on these trends, the company has raised its 2025 outlook. United Rentals aims to maintain focus on execution through its market approach, technology offerings and disciplined capital allocation. Supported by projected free cash flow, the company increased its planned share repurchases for 2025 by $400 million to a total of $1.9 billion.
Adjusted EPS of $10.47 missed the Zacks Consensus Estimate of $10.54 by 0.7%. The reported figure decreased 21% from the prior-year adjusted figure of $10.7 per share.
Total revenues were $3.943 billion in the quarter, beating the consensus mark of $3.909 billion by 0.9%. On a year-over-year basis, the top line grew 4.5%.
Equipment Rentals’ revenues increased 6.2% from the year-ago quarter to $3.415 billion, marking a record high for the second quarter. Fleet productivity inched up 3.3% year over year. Average original equipment at cost increased 3.6% year over year.
Used equipment sales (or sales of rental equipment) decreased 13.2% from a year ago to $317 million. This produced an adjusted gross margin of 48.3%, which contracted 350 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.
General Rentals: This segment registered 2.7% year-over-year growth in revenues to a second-quarter record of $2.268 billion. Rental gross margin contracted 120 bps year over year to 35.1%, indicating the impact of inflation and normal cost variability, including higher delivery, labor and certain other costs.
Specialty: Segmental revenues improved 14% year over year to a second-quarter record of $1.147 billion. Rental gross margin, however, contracted 220 bps year over year to 45.8%, indicating higher depreciation expense related to growth in the company's matting business.
The company’s total equipment rentals’ gross margin contracted 130 bps year over year to 38.7%.
Adjusted EBITDA for the reported period grew 2.3% year over year to $1.81 billion. However, the adjusted EBITDA margin contracted 100 bps to 45.9%. This decline primarily stemmed from a decreased rental and used equipment sales gross margin.
United Rentals had cash and cash equivalents of $548 million as of June 30, 2025, up from $457 million at 2024-end. Total liquidity was $2.996 billion at the second-quarter end. Long-term debt at the second quarter of 2025-end was $12.1 billion, down from $12.23 billion at 2024-end.
As of June 30, 2025, the net leverage ratio was 1.8x, which was flat compared with Dec. 31, 2024. Return on invested capital was 12.4% for the trailing 12 months ended on June 30, 2025.
During the first six months of 2025, net cash from operating activities improved 20% year over year to $2.753 billion. Free cash flow grew 12.5% year over year to $1.198 billion for the said period.
During the first six months of 2025, the company returned $902 million to its shareholders, including $667 million through share repurchases and $235 million in dividends.
Total revenues are now expected to be in the range of $15.8-$16.1 billion compared with $15.6-$16.1 billion expected earlier. The new expectation indicates quite an improvement from $15.345 billion reported in 2024.
Adjusted EBITDA is now projected to be between $7.3 billion and $7.45 billion compared with $7.2 billion to $7.45 billion projected earlier. The guidance indicates an increase from $7.160 billion reported in 2024.
Net rental capital expenditure is still 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 now anticipated to be in the range of $4.9-$5.5 billion, depicting an increase from the prior expectation 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 $2.4-$2.6 billion. The guidance indicates an increase from the prior expectation of $2-$2.2 billion.
It turns out, estimates review have trended downward during the past month.
Currently, United Rentals has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, United Rentals has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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