United Rentals (URI) Expands Reach With Franklin Buyout
United Rentals, Inc. URI has acquired a provider of equipment rentals, sales and related services, namely Franklin Equipment, LLC. This buyout has expanded United Rentals’ presence in the Midwest and Southeast United States. However, the terms of the transaction have not been disclosed.
Following the news, shares of the company moved up 1.09% during the after-hours trading session on Apr 14, 2021.
Franklin Equipment operates in 20 locations, serving general contractors in Ohio, Indiana, Wisconsin, Kentucky, Tennessee, Alabama, Georgia and South Carolina.
Matthew Flannery, president and chief executive officer of United Rentals, said, “This transaction expands our presence in key markets for our general rentals business, with an experienced team that shares our pride in delivering superior customer service.”
Expansion Via Acquisitions Bodes Well
United Rentals is expanding geographic borders and the product portfolio through acquisitions as well as joint ventures. As the largest equipment rental company in the world, United Rentals enjoys a strong brand recognition, which enables it to draw customers and build customer loyalty. The company offers approximately 4,000 classes of rental equipment for rent on an hourly, daily, weekly or monthly basis.
The most important acquisition is that of The BakerCorp (in July 2018), which added 11 European locations in France, Germany, the United Kingdom and the Netherlands to the company’s branch network.
Meanwhile, in 2020, equipment rentals represented 84% of the total revenues. After facing disruptions from the COVID-19 pandemic, the overall construction market has been rebounding. In terms of end market, solid activity was witnessed in power, HVAC, pharma, biotech, warehousing, distribution, data center and hospitals. Non-residential construction (its largest revenue base) has been registering improvement of late. United Rentals has been witnessing rising demand for specialty construction products, which are significantly contributing to the trench, power and fluid solutions segment’s revenues. Also, the demand for used equipment has been solid, post the easing of pandemic-led restrictions.
Shares of United Rentals have gained 40.1% year to date, outperforming the Zacks Building Products – Miscellaneous industry’s 15.3% rally.
Overall, the company’s 2021 guidance indicates a return to positive equipment rental growth and fleet productivity beginning in second-quarter 2021. The optimism was supported by improving customer sentiment and used equipment demand as well as persistent share growth opportunities for certain non-residential verticals including power, healthcare, distribution, and technology.
Zacks Rank & Other Key Picks
United Rentals currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Owens Corning Inc. OC, TopBuild Corp. BLD and Aegion Corporation AEGN, each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Owens Corning and TopBuild are expected to witness 25.9% and 33.2% earnings growth in 2021, respectively.
Aegion delivered an average earnings surprise of 95.1% in the last four quarters.
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