United Rentals Inc (URI)

Conclusion

United Rentals rents construction and industrial equipment, such as aerial lifts, earthmoving machines and power generation, through its General Rentals and Specialty segments in the United States, Canada, Europe, Australia and New Zealand. At a price of 1128.17 USD on 9 November 2026, the market capitalisation is 69.9 billion USD.

The verdict is overvalued. The P/E of 24.4 compares with a ten-year median of 16.3, a premium of 50.4%, and EV/EBITDA of 11.0 compares with a median of 7.5, a premium of 45.9%. The DCF gives 186.32 USD per share at a discount rate of 13.91%, and the fair value from historical multiples is 690.53 USD. The fair value band runs from 350.74 to 526.11 USD with a midpoint of 438.42 USD, a margin of safety of -61.1%. The reverse DCF implies growth of 38.0% a year, while revenue grew at a five-year CAGR of 13.6% and free cash flow per share fell at a five-year CAGR of -13.0%.

What holds the case up is the operating margin of 25.5% against a ten-year median of 24.9%, the Altman Z-score of 3.52, and revenue growth of 13.6% a year over five years. What would break it is the current ratio of 0.80, the five-year free cash flow conversion of 26.9%, and the price-to-free-cash-flow multiple of 78.3 against a median of 41.6.

Financial health

Yellow: the Altman Z-score of 3.52 and the company's ability to cover its interest hold the case up, while a current ratio of 0.80 pulls it down. The current ratio is 0.80 and the quick ratio is 0.65, so short-term obligations are not fully covered by liquid assets. Net debt to EBITDA is 2.0 on a trailing basis, and debt to equity is 1.64. Interest coverage is 6.3 times on a trailing basis. The Altman Z-score is 3.52, in the safe zone, although the model was designed for manufacturers and this company is a rental business. Insolvency risk: low, about 0.9% by the estimate of the Ohlson model over one to two years. The company's trailing debt-to-revenue-growth measure over five years is -3.9%, which means its debt has not grown faster than revenue.

Earnings quality

Yellow: the buybacks and a positive Piotroski score hold the case up, while weak free cash flow conversion pulls it down. Free cash flow conversion is 31.2% on a trailing basis and 26.9% over five years. The accrual ratio is -9.3%, which suggests reported earnings are backed by cash. Stock-based compensation is 0.9% of revenue, and free cash flow after it is 738 million USD. The share count fell at a five-year CAGR of -2.4%, reflecting buybacks. The Piotroski score is 5 out of 9. The Beneish M-score is not available. Over the last eight quarters the company beat estimates four times and missed four times, with an average surprise of 2.4%. Analysts raised current-year estimates, with 16 upgrades and no downgrades in the last 30 days, and the next-year EPS growth estimate is 18.5%.

Profitability

Green: operating and net margins sit above their ten-year medians, which holds the case up. The gross margin is 38.5% against a ten-year median of 37.4%, the operating margin is 25.5% against 24.9%, and the net margin is 16.3% against 14.9%. Operating margin stability is 6.9%. ROIC is 13.3% against a WACC of 12.0%, giving a ROIC minus WACC value of 1.3%, which is neutral. The five-year median ROIC is 12.7%. Return on equity is 29.5% on a trailing basis, but the DuPont split shows an equity multiplier of 3.33 and asset turnover of 0.539, so leverage contributes much of the return. The net margin in the DuPont split is 15.5%.

Growth

Green: revenue and earnings growth are strong over every period shown, which holds the case up. Revenue compounded at 11.4% over three years, 13.6% over five years and 10.7% over ten years. EPS compounded at 9.2% over three years, 25.9% over five years and 20.3% over ten years. Free cash flow per share fell over three years at -0.7% and over five years at -13.0%, while it grew at 10.7% over ten years. Revenue grew in 8 of the last 10 years. Analysts expect EPS growth of 18.5% next year.

Valuation

Red: every multiple sits well above its own ten-year median, which pulls the case down. The P/E is 24.4 against a median of 16.3, a premium of 50.4%. EV/EBITDA is 11.0 against 7.5, a premium of 45.9%. Price to free cash flow is 78.3 against 41.6, a premium of 88.4%. Price to sales is 4.0 against 2.3, and price to book is 7.2 against 4.4. The DCF gives 186.32 USD per share with a discount rate of 13.91%, and 41.1% of its value comes from the terminal value. The fair value from historical multiples is 690.53 USD. The fair value band is 350.74 to 526.11 USD, which is built on fixed assumptions and is not a price target. The reverse DCF implies growth of 38.0%. The dividend yield is 0.7%, and the payout on free cash flow is 54.4%.

Risks

A current ratio of 0.80 means short-term obligations exceed liquid assets, so a slowdown in cash collection would strain liquidity. Free cash flow conversion of 26.9% over five years means much of reported profit does not turn into cash, and a further fall would weaken the buyback capacity. The beta of 1.81 and the WACC of 12.0% mean that any fall in the share price or rise in rates would raise the discount applied to future cash flows. The Beneish M-score is not available, so the risk of earnings manipulation cannot be assessed. The analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and the performance of each segment cannot be examined. The DCF and fair value figures rest on fixed assumptions and are not forecasts.