We will look at some of the S&P 500 companies that will release their earnings today after market and tomorrow before market open and will try to predict its effects on the stock prices from today’s close to tomorrow’s open. Based on the criterias ranging from the stock’s historical volatility during earning release and Industry type, also the availability of CFDs on the stock to trade we have shortlisted below a few names that we have looked into.
United Rentals, Inc. (URI)
United Rentals, Inc., through its subsidiary, is an equipment rental company operating a network of locations in the United States and Canada. The Company serves the construction industry, industrial and commercial concerns, homeowners, and other individuals.
Stock prices have increased in July by around 10-15% still ending below first quarter of 2017 average price by 8%. PE multiple is 1 standard deviation above the 2-year mean, nevertheless, it trades at a 30% discount to its Industry average PE.
Investor expectations towards the stock have changed from strong buy until the end of 2014 to hold after. Some buy lean is visible in 2017.
URI holds the biggest rental market share in us with 10%. However, due to the slowdown in growth United Rentals steadily loses market share to Sunbelt – its main competitor that holds 7% market share.
Despite URI being the biggest player in the US, growth in market penetration rate is slowing (53%).
4.5% growth in US rental market is expected for 2017 as energy headwinds abate and infrastructure program will help, yet funding and timing uncertainties have increased.
United Rentals has been experiencing declining rental rates in the recent quarters, thereby creating pressure on margins. Notably, rental rates declined 1.4% in the first quarter of 2017 as well. Although this trend is not likely to reverse anytime soon, management expressed confidence in first-quarter earnings call that rental rates can improve in the second half of 2017 given the continued improvement in the utilization rate.
This improvement is evident from the first-quarter time-utilization rate that came in at 66%, a record high for the January-March period. It improved 190 basis points year over year.
We recommend to BUY the stock before earning release.