Intrinsic value of United Rentals - URI

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$109.52

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$109.52

 
Intrinsic value

$96.15

 
Up/down potential

-12%

 
Rating

hold

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of URI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -0.95
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  5,762
  5,877
  6,012
  6,167
  6,340
  6,533
  6,744
  6,973
  7,222
  7,490
  7,777
  8,085
  8,413
  8,762
  9,133
  9,527
  9,945
  10,387
  10,854
  11,348
  11,869
  12,420
  13,000
  13,611
  14,256
  14,934
  15,649
  16,401
  17,193
  18,025
  18,901
Variable operating expenses, $m
 
  4,337
  4,429
  4,534
  4,653
  4,784
  4,928
  5,085
  5,254
  5,437
  5,633
  5,517
  5,741
  5,979
  6,233
  6,502
  6,787
  7,088
  7,407
  7,744
  8,100
  8,475
  8,871
  9,289
  9,728
  10,192
  10,679
  11,192
  11,733
  12,301
  12,898
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,347
  4,337
  4,429
  4,534
  4,653
  4,784
  4,928
  5,085
  5,254
  5,437
  5,633
  5,517
  5,741
  5,979
  6,233
  6,502
  6,787
  7,088
  7,407
  7,744
  8,100
  8,475
  8,871
  9,289
  9,728
  10,192
  10,679
  11,192
  11,733
  12,301
  12,898
Operating income, $m
  1,415
  1,540
  1,583
  1,632
  1,688
  1,749
  1,816
  1,889
  1,967
  2,053
  2,144
  2,567
  2,672
  2,783
  2,901
  3,026
  3,158
  3,299
  3,447
  3,604
  3,769
  3,944
  4,128
  4,323
  4,527
  4,743
  4,970
  5,209
  5,460
  5,724
  6,003
EBITDA, $m
  2,660
  2,750
  2,813
  2,886
  2,967
  3,057
  3,155
  3,263
  3,379
  3,505
  3,639
  3,783
  3,937
  4,100
  4,274
  4,458
  4,653
  4,860
  5,079
  5,310
  5,554
  5,811
  6,083
  6,369
  6,671
  6,988
  7,323
  7,675
  8,045
  8,434
  8,844
Interest expense (income), $m
  415
  389
  400
  412
  426
  442
  459
  478
  499
  522
  546
  572
  600
  630
  661
  695
  731
  768
  808
  851
  896
  943
  993
  1,045
  1,101
  1,159
  1,221
  1,285
  1,353
  1,425
  1,501
Earnings before tax, $m
  909
  1,152
  1,184
  1,220
  1,261
  1,307
  1,356
  1,410
  1,468
  1,531
  1,598
  1,995
  2,072
  2,153
  2,239
  2,331
  2,428
  2,530
  2,639
  2,753
  2,874
  3,001
  3,136
  3,277
  3,427
  3,584
  3,749
  3,923
  4,107
  4,299
  4,502
Tax expense, $m
  343
  311
  320
  329
  341
  353
  366
  381
  396
  413
  431
  539
  559
  581
  605
  629
  655
  683
  712
  743
  776
  810
  847
  885
  925
  968
  1,012
  1,059
  1,109
  1,161
  1,216
Net income, $m
  566
  841
  864
  891
  921
  954
  990
  1,029
  1,072
  1,117
  1,166
  1,457
  1,512
  1,572
  1,635
  1,701
  1,772
  1,847
  1,926
  2,010
  2,098
  2,191
  2,289
  2,393
  2,501
  2,616
  2,737
  2,864
  2,998
  3,138
  3,286

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  312
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  11,988
  11,921
  12,196
  12,509
  12,861
  13,251
  13,679
  14,144
  14,649
  15,192
  15,775
  16,399
  17,064
  17,773
  18,526
  19,325
  20,172
  21,069
  22,017
  23,018
  24,076
  25,192
  26,369
  27,609
  28,916
  30,293
  31,742
  33,268
  34,873
  36,562
  38,339
Adjusted assets (=assets-cash), $m
  11,676
  11,921
  12,196
  12,509
  12,861
  13,251
  13,679
  14,144
  14,649
  15,192
  15,775
  16,399
  17,064
  17,773
  18,526
  19,325
  20,172
  21,069
  22,017
  23,018
  24,076
  25,192
  26,369
  27,609
  28,916
  30,293
  31,742
  33,268
  34,873
  36,562
  38,339
Revenue / Adjusted assets
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
  0.493
Average production assets, $m
  7,449
  7,599
  7,774
  7,974
  8,198
  8,447
  8,719
  9,016
  9,338
  9,684
  10,056
  10,453
  10,878
  11,329
  11,809
  12,319
  12,859
  13,430
  14,034
  14,673
  15,347
  16,059
  16,809
  17,600
  18,433
  19,310
  20,234
  21,207
  22,230
  23,307
  24,439
Working capital, $m
  177
  470
  481
  493
  507
  523
  539
  558
  578
  599
  622
  647
  673
  701
  731
  762
  796
  831
  868
  908
  950
  994
  1,040
  1,089
  1,140
  1,195
  1,252
  1,312
  1,375
  1,442
  1,512
Total debt, $m
  7,790
  7,690
  7,926
  8,195
  8,497
  8,832
  9,200
  9,600
  10,033
  10,500
  11,001
  11,537
  12,108
  12,717
  13,364
  14,050
  14,778
  15,548
  16,362
  17,223
  18,131
  19,090
  20,101
  21,166
  22,289
  23,472
  24,717
  26,027
  27,406
  28,857
  30,383
Total liabilities, $m
  10,340
  10,240
  10,476
  10,745
  11,047
  11,382
  11,750
  12,150
  12,583
  13,050
  13,551
  14,087
  14,658
  15,267
  15,914
  16,600
  17,328
  18,098
  18,912
  19,773
  20,681
  21,640
  22,651
  23,716
  24,839
  26,022
  27,267
  28,577
  29,956
  31,407
  32,933
Total equity, $m
  1,648
  1,681
  1,720
  1,764
  1,813
  1,868
  1,929
  1,994
  2,065
  2,142
  2,224
  2,312
  2,406
  2,506
  2,612
  2,725
  2,844
  2,971
  3,104
  3,246
  3,395
  3,552
  3,718
  3,893
  4,077
  4,271
  4,476
  4,691
  4,917
  5,155
  5,406
Total liabilities and equity, $m
  11,988
  11,921
  12,196
  12,509
  12,860
  13,250
  13,679
  14,144
  14,648
  15,192
  15,775
  16,399
  17,064
  17,773
  18,526
  19,325
  20,172
  21,069
  22,016
  23,019
  24,076
  25,192
  26,369
  27,609
  28,916
  30,293
  31,743
  33,268
  34,873
  36,562
  38,339
Debt-to-equity ratio
  4.727
  4.580
  4.610
  4.650
  4.690
  4.730
  4.770
  4.810
  4.860
  4.900
  4.950
  4.990
  5.030
  5.070
  5.120
  5.160
  5.200
  5.230
  5.270
  5.310
  5.340
  5.370
  5.410
  5.440
  5.470
  5.500
  5.520
  5.550
  5.570
  5.600
  5.620
Adjusted equity ratio
  0.114
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  566
  841
  864
  891
  921
  954
  990
  1,029
  1,072
  1,117
  1,166
  1,457
  1,512
  1,572
  1,635
  1,701
  1,772
  1,847
  1,926
  2,010
  2,098
  2,191
  2,289
  2,393
  2,501
  2,616
  2,737
  2,864
  2,998
  3,138
  3,286
Depreciation, amort., depletion, $m
  1,245
  1,210
  1,230
  1,253
  1,279
  1,308
  1,340
  1,374
  1,412
  1,452
  1,495
  1,216
  1,265
  1,317
  1,373
  1,432
  1,495
  1,562
  1,632
  1,706
  1,785
  1,867
  1,955
  2,046
  2,143
  2,245
  2,353
  2,466
  2,585
  2,710
  2,842
Funds from operations, $m
  2,069
  2,050
  2,094
  2,144
  2,200
  2,262
  2,330
  2,404
  2,484
  2,570
  2,662
  2,672
  2,777
  2,889
  3,008
  3,134
  3,267
  3,409
  3,558
  3,716
  3,882
  4,058
  4,244
  4,439
  4,645
  4,862
  5,090
  5,330
  5,583
  5,849
  6,128
Change in working capital, $m
  116
  9
  11
  12
  14
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  33
  35
  37
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
Cash from operations, $m
  1,953
  1,954
  2,083
  2,132
  2,186
  2,247
  2,313
  2,385
  2,464
  2,548
  2,639
  2,648
  2,751
  2,861
  2,978
  3,102
  3,234
  3,373
  3,521
  3,676
  3,841
  4,014
  4,197
  4,390
  4,593
  4,807
  5,033
  5,270
  5,519
  5,782
  6,058
Maintenance CAPEX, $m
  0
  -866
  -884
  -904
  -927
  -953
  -982
  -1,014
  -1,048
  -1,086
  -1,126
  -1,169
  -1,216
  -1,265
  -1,317
  -1,373
  -1,432
  -1,495
  -1,562
  -1,632
  -1,706
  -1,785
  -1,867
  -1,955
  -2,046
  -2,143
  -2,245
  -2,353
  -2,466
  -2,585
  -2,710
New CAPEX, $m
  -1,339
  -151
  -175
  -200
  -224
  -249
  -273
  -297
  -321
  -346
  -372
  -398
  -424
  -452
  -480
  -509
  -540
  -571
  -604
  -639
  -674
  -711
  -750
  -791
  -833
  -878
  -924
  -972
  -1,023
  -1,077
  -1,132
Cash from investing activities, $m
  -859
  -1,017
  -1,059
  -1,104
  -1,151
  -1,202
  -1,255
  -1,311
  -1,369
  -1,432
  -1,498
  -1,567
  -1,640
  -1,717
  -1,797
  -1,882
  -1,972
  -2,066
  -2,166
  -2,271
  -2,380
  -2,496
  -2,617
  -2,746
  -2,879
  -3,021
  -3,169
  -3,325
  -3,489
  -3,662
  -3,842
Free cash flow, $m
  1,094
  937
  1,025
  1,028
  1,035
  1,045
  1,058
  1,075
  1,094
  1,116
  1,141
  1,081
  1,111
  1,145
  1,181
  1,220
  1,262
  1,307
  1,355
  1,406
  1,460
  1,518
  1,580
  1,645
  1,714
  1,786
  1,863
  1,944
  2,030
  2,120
  2,216
Issuance/(repayment) of debt, $m
  -471
  212
  236
  269
  302
  335
  367
  400
  433
  467
  501
  536
  572
  609
  647
  686
  727
  770
  814
  860
  909
  959
  1,011
  1,066
  1,123
  1,183
  1,245
  1,310
  1,379
  1,451
  1,526
Issuance/(repurchase) of shares, $m
  -527
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -964
  212
  236
  269
  302
  335
  367
  400
  433
  467
  501
  536
  572
  609
  647
  686
  727
  770
  814
  860
  909
  959
  1,011
  1,066
  1,123
  1,183
  1,245
  1,310
  1,379
  1,451
  1,526
Total cash flow (excl. dividends), $m
  133
  1,149
  1,260
  1,297
  1,337
  1,380
  1,426
  1,475
  1,527
  1,583
  1,642
  1,616
  1,683
  1,753
  1,828
  1,906
  1,989
  2,077
  2,169
  2,266
  2,369
  2,477
  2,591
  2,710
  2,836
  2,969
  3,108
  3,255
  3,409
  3,571
  3,742
Retained Cash Flow (-), $m
  -172
  -33
  -39
  -44
  -50
  -55
  -60
  -66
  -71
  -77
  -82
  -88
  -94
  -100
  -106
  -113
  -119
  -126
  -134
  -141
  -149
  -157
  -166
  -175
  -184
  -194
  -204
  -215
  -226
  -238
  -250
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,116
  1,222
  1,253
  1,287
  1,325
  1,365
  1,409
  1,456
  1,506
  1,560
  1,529
  1,589
  1,653
  1,721
  1,794
  1,870
  1,950
  2,035
  2,125
  2,220
  2,320
  2,425
  2,535
  2,652
  2,775
  2,904
  3,040
  3,183
  3,333
  3,491
Discount rate, %
 
  10.30
  10.82
  11.36
  11.92
  12.52
  13.15
  13.80
  14.49
  15.22
  15.98
  16.78
  17.62
  18.50
  19.42
  20.39
  21.41
  22.48
  23.61
  24.79
  26.03
  27.33
  28.70
  30.13
  31.64
  33.22
  34.88
  36.62
  38.45
  40.38
  42.40
PV of cash for distribution, $m
 
  1,012
  995
  907
  820
  735
  651
  570
  493
  421
  354
  278
  227
  182
  143
  111
  84
  62
  45
  32
  22
  15
  9
  6
  4
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools. This segment serves construction and industrial companies, manufacturers, utilities, municipalities, and homeowners. The Trench, Power, and Pump segment is involved in the rental of specialty construction products, including trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and HVAC equipment, which consists of portable diesel generators, electrical distribution equipment, and temperature control equipment; and pumps primarily used by energy and petrochemical customers. It serves construction companies involved in infrastructure projects, municipalities, and industrial companies. The company also sells new equipment, such as aerial lifts, reach forklifts, telehandlers, compressors, and generators; contractor supplies, including construction consumables, tools, small equipment, and safety supplies; and parts for equipment that are owned by the company’s customers, as well as provides repair and maintenance services. It sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers. As of January 1, 2017, the company operated 887 rental locations in the United States and Canada. United Rentals, Inc. was founded in 1997 and is headquartered in Stamford, Connecticut.

FINANCIAL RATIOS  of  United Rentals (URI)

Valuation Ratios
P/E Ratio 16.3
Price to Sales 1.6
Price to Book 5.6
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 15
Growth Rates
Sales Growth Rate -0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.2%
Cap. Spend. - 3 Yr. Gr. Rate -4.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 436.5%
Total Debt to Equity 472.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 7%
Return On Total Capital 5.9%
Ret/ On T. Cap. - 3 Yr. Avg. 5.9%
Return On Equity 36.2%
Return On Equity - 3 Yr. Avg. 33.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 41.7%
Gross Margin - 3 Yr. Avg. 42.4%
EBITDA Margin 44.6%
EBITDA Margin - 3 Yr. Avg. 44.7%
Operating Margin 24.6%
Oper. Margin - 3 Yr. Avg. 25%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 15.8%
Net Profit Margin 9.8%
Net Profit Margin - 3 Yr. Avg. 9.8%
Effective Tax Rate 37.7%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

URI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the URI stock intrinsic value calculation we used $5762 million for the last fiscal year's total revenue generated by United Rentals. The default revenue input number comes from 2016 income statement of United Rentals. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our URI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.3%, whose default value for URI is calculated based on our internal credit rating of United Rentals, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of United Rentals.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of URI stock the variable cost ratio is equal to 73.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for URI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.2% for United Rentals.

Corporate tax rate of 27% is the nominal tax rate for United Rentals. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the URI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for URI are equal to 129.3%.

Life of production assets of 8.6 years is the average useful life of capital assets used in United Rentals operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for URI is equal to 8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1648 million for United Rentals - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 85.086 million for United Rentals is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of United Rentals at the current share price and the inputted number of shares is $9.3 billion.


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COMPANY NEWS

▶ The Biggest Loser: United Rentals Tumbles 5.2%   [Apr-20-17 05:35PM  Barrons.com]
▶ After-hours buzz: QCOM, CSX, AXP & more   [Apr-19-17 05:59PM  CNBC]
▶ Final Trade: APC, URI & more   [05:59PM  CNBC Videos]
▶ United Rentals tanks on weak rental rates   [05:44PM  CNBC Videos]
▶ United Rentals tops 1Q profit forecasts   [04:22PM  Associated Press]
▶ 3 Stocks That Doubled Since Last Year   [08:53AM  Motley Fool]
▶ 3 Winning Stocks You Never Saw Coming   [03:45PM  Motley Fool]
▶ Caterpillar Lifts Dow With Goldman Push; Trump Readies Infrastructure Bill   [Apr-04-17 04:31PM  Investor's Business Daily]
▶ What to sell at records highs   [Feb-10-17 06:48PM  at CNBC]
▶ Why Shares of United Rentals, Inc. Jumped 20% in January   [Feb-07-17 02:35PM  at Motley Fool]
▶ The Hot Stock: United Rentals Soars 11%   [04:19PM  at Barrons.com]
▶ [$$] Diamond Castle Sells NES Rentals for $965 Million   [12:36PM  at The Wall Street Journal]
Stock chart of URI Financial statements of URI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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