United Rentals, Inc.

This is our first report on United Rentals, one of the largest equipment rental companies in the world, known for renting out construction, aerial and industrial equipment, general tools and light equipment. The company delivered a mixed result failing to meet revenue expectations of Wall Street but managed an earnings beat. It is operating in a favorable operational climate. The company’s fleet productivity increased by roughly 9%, while rental revenue increased by 20% year over year in the last quarter. Furthermore, rental income increased by double digits year over year in each of their segments in every region, driven by their Mobile Storage and Fluid Solutions businesses, reflecting the strong demand for specialty across the market. The demand for its equipment rental services is relatively high, even though some parts of the economy are slowing down. Customer activity is still on the rise in their sector. Key industrial indicators and customer satisfaction are positive. Moreover, manufacturing has seen fresh investments around hundreds of billions of dollars in the electrification of automobiles, the construction of microchip manufacturing, and the general trend toward onshoring are already the subject of investments. There is also a greater emphasis on energy production to meet the needs of markets in North America and Europe. The manufacturing and construction industries are only now experiencing several of these tailwinds. All of this taken together represents a significant opportunity for the company. We initiate coverage on the stock of United Rentals with a ‘Hold’ rating.