Intrinsic value of United Rentals - URI

Previous Close

$111.97

  Intrinsic Value

$104.52

stock screener

  Rating & Target

hold

-7%

  Value-price divergence*

-56%

Previous close

$111.97

 
Intrinsic value

$104.52

 
Up/down potential

-7%

 
Rating

hold

 
Value-price divergence*

-56%

*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 9.4

 

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
  3.50
  3.65
  3.78
  3.91
  4.02
  4.11
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
Revenue, $m
  5,762
  5,964
  6,181
  6,415
  6,666
  6,934
  7,219
  7,522
  7,844
  8,186
  8,548
  8,930
  9,335
  9,762
  10,213
  10,689
  11,190
  11,718
  12,275
  12,861
  13,478
  14,127
  14,811
  15,529
  16,285
  17,080
  17,915
  18,794
  19,717
  20,688
  21,707
Variable operating expenses, $m
 
  4,396
  4,544
  4,704
  4,875
  5,058
  5,252
  5,459
  5,679
  5,912
  6,159
  6,094
  6,370
  6,662
  6,970
  7,294
  7,636
  7,997
  8,377
  8,777
  9,198
  9,641
  10,107
  10,598
  11,113
  11,656
  12,226
  12,825
  13,455
  14,118
  14,814
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
  4,396
  4,544
  4,704
  4,875
  5,058
  5,252
  5,459
  5,679
  5,912
  6,159
  6,094
  6,370
  6,662
  6,970
  7,294
  7,636
  7,997
  8,377
  8,777
  9,198
  9,641
  10,107
  10,598
  11,113
  11,656
  12,226
  12,825
  13,455
  14,118
  14,814
Operating income, $m
  1,415
  1,568
  1,637
  1,711
  1,791
  1,876
  1,967
  2,063
  2,165
  2,274
  2,389
  2,836
  2,965
  3,100
  3,243
  3,394
  3,554
  3,721
  3,898
  4,084
  4,280
  4,487
  4,704
  4,932
  5,172
  5,424
  5,690
  5,969
  6,262
  6,570
  6,894
EBITDA, $m
  2,660
  2,665
  2,762
  2,867
  2,979
  3,098
  3,226
  3,362
  3,505
  3,658
  3,820
  3,991
  4,172
  4,362
  4,564
  4,776
  5,001
  5,237
  5,485
  5,747
  6,023
  6,313
  6,619
  6,940
  7,277
  7,633
  8,006
  8,399
  8,811
  9,245
  9,701
Interest expense (income), $m
  415
  405
  424
  444
  466
  489
  514
  541
  569
  599
  631
  665
  701
  738
  778
  820
  865
  911
  961
  1,013
  1,067
  1,125
  1,185
  1,249
  1,316
  1,387
  1,461
  1,539
  1,621
  1,707
  1,797
Earnings before tax, $m
  909
  1,163
  1,213
  1,267
  1,325
  1,387
  1,452
  1,522
  1,596
  1,674
  1,757
  2,171
  2,264
  2,362
  2,465
  2,574
  2,689
  2,810
  2,938
  3,072
  3,213
  3,362
  3,518
  3,683
  3,856
  4,037
  4,229
  4,430
  4,641
  4,863
  5,096
Tax expense, $m
  343
  314
  328
  342
  358
  374
  392
  411
  431
  452
  475
  586
  611
  638
  666
  695
  726
  759
  793
  829
  868
  908
  950
  994
  1,041
  1,090
  1,142
  1,196
  1,253
  1,313
  1,376
Net income, $m
  566
  849
  886
  925
  967
  1,012
  1,060
  1,111
  1,165
  1,222
  1,283
  1,585
  1,653
  1,724
  1,800
  1,879
  1,963
  2,051
  2,144
  2,242
  2,346
  2,454
  2,568
  2,688
  2,815
  2,947
  3,087
  3,234
  3,388
  3,550
  3,720

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
  12,398
  12,851
  13,337
  13,858
  14,415
  15,008
  15,639
  16,309
  17,019
  17,771
  18,566
  19,407
  20,295
  21,233
  22,222
  23,264
  24,363
  25,520
  26,738
  28,021
  29,371
  30,791
  32,285
  33,857
  35,509
  37,246
  39,072
  40,992
  43,009
  45,130
Adjusted assets (=assets-cash), $m
  11,676
  12,398
  12,851
  13,337
  13,858
  14,415
  15,008
  15,639
  16,309
  17,019
  17,771
  18,566
  19,407
  20,295
  21,233
  22,222
  23,264
  24,363
  25,520
  26,738
  28,021
  29,371
  30,791
  32,285
  33,857
  35,509
  37,246
  39,072
  40,992
  43,009
  45,130
Revenue / Adjusted assets
  0.493
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
Average production assets, $m
  7,449
  7,711
  7,992
  8,295
  8,619
  8,965
  9,334
  9,726
  10,143
  10,584
  11,052
  11,547
  12,070
  12,622
  13,205
  13,820
  14,469
  15,152
  15,872
  16,629
  17,427
  18,267
  19,150
  20,079
  21,057
  22,084
  23,165
  24,300
  25,494
  26,749
  28,068
Working capital, $m
  177
  477
  495
  513
  533
  555
  578
  602
  628
  655
  684
  714
  747
  781
  817
  855
  895
  937
  982
  1,029
  1,078
  1,130
  1,185
  1,242
  1,303
  1,366
  1,433
  1,504
  1,577
  1,655
  1,737
Total debt, $m
  7,790
  8,150
  8,540
  8,960
  9,410
  9,890
  10,402
  10,946
  11,524
  12,137
  12,786
  13,473
  14,198
  14,965
  15,774
  16,627
  17,527
  18,475
  19,474
  20,525
  21,632
  22,797
  24,023
  25,312
  26,668
  28,094
  29,594
  31,170
  32,826
  34,567
  36,397
Total liabilities, $m
  10,340
  10,700
  11,090
  11,510
  11,960
  12,440
  12,952
  13,496
  14,074
  14,687
  15,336
  16,023
  16,748
  17,515
  18,324
  19,177
  20,077
  21,025
  22,024
  23,075
  24,182
  25,347
  26,573
  27,862
  29,218
  30,644
  32,144
  33,720
  35,376
  37,117
  38,947
Total equity, $m
  1,648
  1,699
  1,761
  1,827
  1,899
  1,975
  2,056
  2,143
  2,234
  2,332
  2,435
  2,544
  2,659
  2,780
  2,909
  3,044
  3,187
  3,338
  3,496
  3,663
  3,839
  4,024
  4,218
  4,423
  4,638
  4,865
  5,103
  5,353
  5,616
  5,892
  6,183
Total liabilities and equity, $m
  11,988
  12,399
  12,851
  13,337
  13,859
  14,415
  15,008
  15,639
  16,308
  17,019
  17,771
  18,567
  19,407
  20,295
  21,233
  22,221
  23,264
  24,363
  25,520
  26,738
  28,021
  29,371
  30,791
  32,285
  33,856
  35,509
  37,247
  39,073
  40,992
  43,009
  45,130
Debt-to-equity ratio
  4.727
  4.800
  4.850
  4.900
  4.960
  5.010
  5.060
  5.110
  5.160
  5.210
  5.250
  5.300
  5.340
  5.380
  5.420
  5.460
  5.500
  5.540
  5.570
  5.600
  5.640
  5.670
  5.690
  5.720
  5.750
  5.780
  5.800
  5.820
  5.850
  5.870
  5.890
Adjusted equity ratio
  0.114
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137
  0.137

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  566
  849
  886
  925
  967
  1,012
  1,060
  1,111
  1,165
  1,222
  1,283
  1,585
  1,653
  1,724
  1,800
  1,879
  1,963
  2,051
  2,144
  2,242
  2,346
  2,454
  2,568
  2,688
  2,815
  2,947
  3,087
  3,234
  3,388
  3,550
  3,720
Depreciation, amort., depletion, $m
  1,245
  1,097
  1,125
  1,155
  1,188
  1,223
  1,259
  1,299
  1,340
  1,384
  1,431
  1,155
  1,207
  1,262
  1,321
  1,382
  1,447
  1,515
  1,587
  1,663
  1,743
  1,827
  1,915
  2,008
  2,106
  2,208
  2,316
  2,430
  2,549
  2,675
  2,807
Funds from operations, $m
  2,069
  1,946
  2,011
  2,081
  2,155
  2,235
  2,320
  2,410
  2,505
  2,607
  2,714
  2,740
  2,860
  2,986
  3,120
  3,261
  3,410
  3,567
  3,732
  3,905
  4,088
  4,281
  4,483
  4,696
  4,920
  5,156
  5,403
  5,664
  5,937
  6,225
  6,527
Change in working capital, $m
  116
  16
  17
  19
  20
  21
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  45
  47
  49
  52
  55
  57
  60
  64
  67
  70
  74
  78
  82
Cash from operations, $m
  1,953
  1,930
  1,994
  2,062
  2,135
  2,213
  2,297
  2,385
  2,480
  2,579
  2,685
  2,709
  2,827
  2,952
  3,084
  3,223
  3,370
  3,524
  3,687
  3,858
  4,039
  4,229
  4,429
  4,639
  4,860
  5,092
  5,337
  5,593
  5,863
  6,147
  6,445
Maintenance CAPEX, $m
  0
  -745
  -771
  -799
  -829
  -862
  -897
  -933
  -973
  -1,014
  -1,058
  -1,105
  -1,155
  -1,207
  -1,262
  -1,321
  -1,382
  -1,447
  -1,515
  -1,587
  -1,663
  -1,743
  -1,827
  -1,915
  -2,008
  -2,106
  -2,208
  -2,316
  -2,430
  -2,549
  -2,675
New CAPEX, $m
  -1,339
  -263
  -281
  -303
  -324
  -346
  -369
  -392
  -417
  -442
  -468
  -495
  -523
  -552
  -583
  -615
  -648
  -683
  -720
  -758
  -798
  -840
  -883
  -929
  -977
  -1,028
  -1,080
  -1,136
  -1,194
  -1,255
  -1,319
Cash from investing activities, $m
  -859
  -1,008
  -1,052
  -1,102
  -1,153
  -1,208
  -1,266
  -1,325
  -1,390
  -1,456
  -1,526
  -1,600
  -1,678
  -1,759
  -1,845
  -1,936
  -2,030
  -2,130
  -2,235
  -2,345
  -2,461
  -2,583
  -2,710
  -2,844
  -2,985
  -3,134
  -3,288
  -3,452
  -3,624
  -3,804
  -3,994
Free cash flow, $m
  1,094
  922
  941
  960
  982
  1,005
  1,031
  1,060
  1,090
  1,124
  1,159
  1,109
  1,150
  1,193
  1,239
  1,288
  1,339
  1,394
  1,452
  1,513
  1,578
  1,646
  1,719
  1,794
  1,875
  1,959
  2,048
  2,141
  2,240
  2,343
  2,452
Issuance/(repayment) of debt, $m
  -471
  360
  391
  420
  450
  480
  512
  544
  578
  613
  649
  687
  726
  766
  809
  853
  900
  948
  999
  1,052
  1,107
  1,165
  1,226
  1,289
  1,356
  1,426
  1,499
  1,576
  1,657
  1,741
  1,830
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
  360
  391
  420
  450
  480
  512
  544
  578
  613
  649
  687
  726
  766
  809
  853
  900
  948
  999
  1,052
  1,107
  1,165
  1,226
  1,289
  1,356
  1,426
  1,499
  1,576
  1,657
  1,741
  1,830
Total cash flow (excl. dividends), $m
  133
  1,282
  1,332
  1,380
  1,431
  1,486
  1,543
  1,604
  1,668
  1,736
  1,808
  1,796
  1,875
  1,959
  2,048
  2,141
  2,239
  2,342
  2,451
  2,565
  2,685
  2,811
  2,944
  3,084
  3,231
  3,385
  3,547
  3,717
  3,896
  4,084
  4,282
Retained Cash Flow (-), $m
  -172
  -51
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -122
  -128
  -135
  -143
  -150
  -159
  -167
  -176
  -185
  -195
  -205
  -215
  -226
  -238
  -250
  -263
  -276
  -290
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
 
  1,232
  1,270
  1,313
  1,360
  1,409
  1,462
  1,518
  1,577
  1,639
  1,705
  1,687
  1,760
  1,838
  1,919
  2,006
  2,096
  2,192
  2,292
  2,398
  2,509
  2,627
  2,750
  2,879
  3,015
  3,158
  3,309
  3,467
  3,633
  3,808
  3,991
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
 
  1,117
  1,034
  951
  867
  781
  697
  614
  534
  458
  387
  306
  251
  202
  160
  124
  94
  70
  51
  36
  25
  16
  11
  7
  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 16.7
Price to Sales 1.6
Price to Book 5.7
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 15.4
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 3.5% 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 10 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 84.208 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 $9.4 billion.

RELATED COMPANIES Price Int.Val. Rating
HEES H&E Equipment 21.29 8.71  str.sell
NEFF Neff Cl A 24.55 4.81  str.sell
HRI Herc Holdings 38.03 5.79  str.sell

COMPANY NEWS

▶ United Rentals: It Remains to Be Seen   [Aug-17-17 11:35AM  Barrons.com]
▶ United Rentals to Acquire Neff Corporation   [10:46PM  Business Wire]
▶ 2 Stocks That Will Thrive as We Rebuild America   [Aug-14-17 07:02PM  InvestorPlace]
▶ United Rentals: Cramer's Top Takeaways   [06:36AM  TheStreet.com]
▶ PEG Ratio vs. the P/E Ratio   [Jul-25-17 02:32PM  Zacks]
▶ United Rentals beats Street 2Q forecasts   [Jul-19-17 09:23PM  Associated Press]
▶ American Express, United Rentals Beat; Alcoa Warns On Costs   [06:23PM  Investor's Business Daily]
▶ Sell the Bounce in United Rentals   [Jun-29-17 01:40PM  TheStreet.com]
▶ The Biggest Loser: United Rentals Slides 6.1%   [Jun-14-17 05:04PM  Barrons.com]
▶ Here Are Mario Gabellis Top Infrastructure Bets   [May-26-17 07:37AM  Market Realist]
▶ ETFs with exposure to United Rentals, Inc. : May 18, 2017   [May-18-17 02:05PM  Capital Cube]
▶ "Fast Money" final trades: SBUX, URI & more   [May-17-17 05:59PM  CNBC Videos]
▶ Trading on a tumultuous day: 6 stocks   [05:00PM  CNBC Videos]
▶ United Rentals Stock Upgraded at Evercore ISI   [May-08-17 09:52AM  TheStreet.com]
▶ ETFs with exposure to United Rentals, Inc. : May 5, 2017   [May-05-17 04:39PM  Capital Cube]
▶ Three Trump Stocks That Still Have Room To Run   [May-03-17 10:02AM  Forbes]
▶ 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]
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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