United Rentals, Inc. (URI): what the price requires
At today's price, United Rentals, Inc. (URI) is priced for today's economics sustained for ~6.1 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/URI
Headline
| Field | Value |
|---|---|
| Ticker | URI |
| Company | United Rentals, Inc. |
| Current price | $1085.17/sh |
| Composition | Owned equipment rentals 69% / Re-rent revenue 2% / Delivery and pick-up 7% / Other ancillary rental revenues 8% / Sales of rental equipment 9% / Sales of new equipment 2% / Contractor supplies sales 1% / Service and other revenues 2% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 10.5% |
| Operating margin today | 24.7% |
| Margin compression implied | -14.2pp |
| Must persist for | 6.1y |
| Multiple paid | 21x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.
Reconcile: at the x-ray's 9.3% required return this reads ~18.3%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.10σ |
| cohort percentile (of 225 peers) | 48 |
| sustained it ~6.1 years at this level | 26% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.52x | 5 | expensive |
| Earnings | 2.54x | 5 | expensive |
| Relative | 1.67x | 5 | expensive |
| Growth | 0.90x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $1667.01 | 0.65x | yes | FCF base $5.4B, growth 5% (input: historical growth), terminal g 4.0%, WACC 9.0%, 6yr projection |
| DCF Exit Multiple | Growth | $1201.65 | 0.90x | yes | Exit EV/EBITDA: 13.9x / 15.9x / 17.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $839.79 | 1.29x | yes | P/E 20.78x (blended: static sector reference 18x + trailing (TTM) 27x), scenarios: 17.4x / 20.8x / 24.2x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $430.02 | 2.52x | yes | BV/sh $142.29, ROE (TTM) 28.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $762.43 | 1.42x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $814.59 | 1.33x | yes | Rev $16.4B, growth 5% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 4.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $470.40 | 2.31x | yes | EPS $39.20, growth 2% (input: historical EPS growth), PEG=15.26 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $427.90 | 2.54x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.59B × (1−24%) / WACC 9.0% → EPV (no growth) |
| Residual Income | Asset | $648.35 | 1.67x | yes | BV $142.29 + 5yr PV of (ROE (TTM) 28.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $354.26 | 3.06x | yes | √(22.5 × EPS $39.20 × BVPS $142.29) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $810.97 | 1.34x | yes | EBITDA $4.48B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $864.25 | 1.26x | yes | FCF $5279.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $841.27 | 1.29x | yes | SBC-adj FCF $5.14B (FCF $5.28B − SBC $0.13B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $396.71 | 2.74x | yes | EPS $39.20 × (8.5 + 2×1.8%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $89.58 | 12.11x | yes | BV $142.29 × (ROIC 5.7% / WACC 9.0%) |
| P/Sales Sector | Relative | $649.14 | 1.67x | yes | Revenue $16.36B × sector P/S 2.5x |
| PEG Fair Value | Relative | $196.00 | 5.54x | yes | EPS $39.20 × (PEG 1.5 × growth 1.8% (input: historical EPS growth)) → PE 2.7x |
| Earnings Yield | Earnings | $423.78 | 2.56x | yes | EPS $39.20 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $16.1b |
| Net debt / NOPAT (after-tax) | 5.26x |
| Net debt / operating income (pre-tax) | 3.99x |
| Share count CAGR (buyback) | -3.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- United Rentals is the largest equipment-rental company in North America, running two segments its 10-K defines as general rentals (construction, aerial, industrial gear) and the higher-margin specialty business, with equipment rentals making up the large majority of revenue.
- Q1 2026 set first-quarter records: total revenue of $3.985 billion rose 7.2%, rental revenue of $3.419 billion rose 8.7%, adjusted EBITDA margin reached 44.1%, and the company raised full-year guidance to $16.9 to $17.4 billion of revenue.
- The defining tension is leverage against the cycle: URI carries about $16.1 billion of net debt, roughly four times operating income, on a business whose demand rises and falls with construction and industrial activity.
Bull Case
The balance sheet tells the story of how United Rentals uses the cash a scaled rental business throws off. The model is capital-intensive by design, but it generates enormous free cash flow, about $5.3 billion on a trailing basis, and management has a clear playbook for it: buy fleet, make tuck-in acquisitions, and return capital. In 2024 the company repurchased $1.25 billion of stock, and it paused that program only because of a pending acquisition, stating it currently intends to complete the repurchase program once it reassesses capital uses. With that acquisition since terminated, the buyback capacity is intact, and the share count has been falling about 3.5% a year. A business funding fleet growth, bolt-on M&A, and a billion-plus buyback simultaneously is generating cash well beyond what it needs to run, which is the signature of scale economics in rental.
The operating results show the scale paying off. Q1 2026 delivered record first-quarter revenue of $3.985 billion, up 7.2%, with rental revenue up 8.7% to $3.419 billion and adjusted EBITDA of $1.759 billion at a 44.1% margin. Fleet productivity rose 2.3%, ahead of the company's own inflation bogey, which means URI is earning more from each piece of equipment it owns, not just adding more equipment. That productivity gain is the moat in action: the largest fleet and densest branch network let URI place the right asset on the right job site faster than smaller competitors, and the specialty segment extends the same advantage into higher-margin niches.
The returns justify the capital intensity. Return on equity runs near 28%, the operating margin near 25%, and management raised full-year 2026 guidance to revenue of $16.9 to $17.4 billion and adjusted EBITDA of $7.625 to $7.875 billion, signaling confidence in demand across both general rentals and specialty. The static valuation methods land below the price because they cannot price a franchise that compounds a high return on a large asset base; only the forward-growth methods reach it. The bull case is a market-leading, cash-generative rental platform with rising fleet productivity, intact buyback capacity, and a raised outlook, where the scale advantage is the durable compounding the static frames structurally miss.
Bear Case
Here is the structural truth a United Rentals holder underwrites: this is a leveraged bet on the construction and industrial cycle, and both the leverage and the cycle are fixed facts. The company carries about $16.1 billion of net debt, roughly four times operating income, against a business whose revenue swings with non-residential construction, industrial activity, and infrastructure spending. In an upturn, the operating leverage of a fleet-heavy model is wonderful: revenue grows, the fixed fleet earns more, and margins expand toward the 44% EBITDA level just reported. In a downturn, the same mechanism reverses, and the debt does not. A cyclical business at a high margin with high leverage is priced on the assumption that the good part of the cycle continues, and cycles do not continue forever.
The current margins are near peak, which makes the comparison harder. A 24.7% operating margin and a 44% EBITDA margin are strong-cycle numbers, not through-cycle averages. When construction activity softens, fleet utilization falls, rental rates come under pressure, and the company faces a choice between cutting fleet investment or letting returns compress. The valuation gives no discount for that. On trailing earnings, the asset, earnings-power, and peer-multiple methods all land well below the price: normalized earnings power near $428, the simple excess-return method near $430, and the conservative Graham floor near $354. Only the forward-growth methods reach the current price, and they get there by extrapolating the strong cycle forward. The price is paying for peak conditions to persist, which is the most fragile assumption in a cyclical.
The capital intensity is relentless. A rental company must continuously reinvest to keep its fleet current, so the free cash flow that funds the buyback is also competing with the fleet capex the business needs to maintain its edge. The company's M&A appetite, including the recently terminated H&E acquisition, shows it will spend large sums to consolidate, and integration and deal risk come with that. The peer set, the other equipment-rental names, all share the same cyclicality, so there is no defensive corner of the industry to rotate into. The balance sheet is investment-grade and the cash flow is strong, so the bear is not about solvency. It is that a fully-priced, peak-margin, heavily-leveraged cyclical is betting the construction cycle stays favorable, and the price has no cushion if it does not.
Valuation
The price is making a durable-compounding bet on a cyclical business, which is the tension worth naming up front. Inverting today's price near $1,076 (June 28, 2026) implies operating growth sustained for about six years on an operating margin near 8.8%, well below the 24.7% United Rentals earns today. The embedded assumption is not that the current peak margin holds, but that the business keeps compounding at a healthy rate for years, which for a cyclical is really a bet on the cycle staying constructive over that horizon.
The methods split cleanly between today and tomorrow. The asset-based methods land far below the price, with the simple excess-return method near $430 against a book value of $142.29 a share, because they value the equity on its book and trailing returns. The earnings-power methods land near $428, capitalizing current earnings with no growth. The peer-multiple methods land in the $650 to $840 range on sector multiples around 12 times EV/EBITDA. Only the forward-growth methods reach the price, with the perpetual-growth cash-flow approach landing above it at $1,668 by crediting continued growth and the exit-multiple version near $1,195. The pattern is the signature of a high-return cyclical at a strong point in its cycle: every backward-looking method calls it expensive, and only the methods that credit forward growth reach the price. The spread is the premium the market pays for the scale advantage and the cycle continuing.
The balance sheet is the load-bearing risk and must frame the close. Net debt of about $16.1 billion is roughly four times operating income, a level that is workable for an investment-grade rental company with $5.3 billion of free cash flow but that becomes the constraint if the cycle turns and EBITDA falls. The leverage cuts the same way the operating model does: an amplifier on the upside, a weight on the downside. The peer set runs to the other equipment-rental operators, all of which carry the same cyclicality and capital intensity, so the relevant question is fleet productivity and scale, not relative cheapness. What the buyer is underwriting at this price is years of continued compounding from the scale leader, financed by a leveraged balance sheet, with the construction and industrial cycle as the variable that determines whether the bet pays.
Catalysts
The Q1 2026 report was the catalyst, and it was a record beat. United Rentals posted first-quarter records with total revenue of $3.985 billion, up 7.2% and about $100 million above consensus, GAAP EPS of $9.71 against an estimate of $9.06, rental revenue of $3.419 billion up 8.7%, and adjusted EBITDA of $1.759 billion at a 44.1% margin. Fleet productivity of 2.3% exceeded the company's internal inflation bogey, and on the strength of the quarter management raised full-year 2026 guidance to revenue of $16.9 to $17.4 billion and adjusted EBITDA of $7.625 to $7.875 billion.
The capital-allocation picture is the other live story. The prior-year quarter had included a net after-tax benefit related to the terminated H&E Equipment Services acquisition, so the H&E deal is off the table, which frees United Rentals to redirect that capital toward its repurchase program and continued tuck-in M&A; recent acquisitions ran roughly $400 million in the quarter but contributed only about 1% to revenue growth, underscoring that the growth is mostly organic.
The catalysts to watch are the quarterly fleet-productivity and rental-rate prints, which signal whether pricing power is holding, the resumption and pace of share repurchases now that the H&E deal is done, and the broader construction and industrial demand backdrop, including infrastructure and data-center build-out, which drives the rental volume the entire thesis depends on. Any update to the full-year guidance will be read as the cleanest signal of where management sees the cycle heading.
Peer Cohorts (Per Segment, With Filing Citations)
General rentals (reported)
- CTOS (Custom Truck One Source, Inc.)
- (no filing in the citation store)
- WSC (WILLSCOT HOLDINGS CORPORATION)
- (no filing in the citation store)
- MGRC (McGRATH RENTCORP)
- (no filing in the citation store)
Specialty (reported)
- WSC (WILLSCOT HOLDINGS CORPORATION)
- (no filing in the citation store)
- MGRC (McGRATH RENTCORP)
- (no filing in the citation store)
- CTOS (Custom Truck One Source, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
URI FY2024 10-K · URI Q1 2026 earnings release, April 2026