Last Update 16 Dec 25

Fair value Decreased 1.79%

URI: Secular Construction And Infrastructure Tailwinds Will Drive Future Upside Potential

Analysts modestly trimmed their fair value estimate for United Rentals to approximately $1,007 from about $1,025, reflecting slightly higher discount rates and a marginally lower future earnings multiple, even as long term demand drivers and solid revenue growth expectations remain intact.

Analyst Commentary

Recent Street research on United Rentals skews positive, with multiple bullish analysts highlighting robust demand drivers, structurally attractive industry dynamics and room for multiple expansion, even as some more cautious voices point to margin pressure and cyclical risks that could cap near term upside.

Bullish Takeaways

Bullish analysts emphasize United Rentals positioning as a unit profitability compounder, arguing that consistent revenue and adjusted EBITDA growth can justify a premium valuation multiple over peers.
Several price target hikes into the $1,050 to $1,150 range, including from Citi and JPMorgan, are tied to expectations for reacceleration in 2026 and continued share gains as non residential construction spend and infrastructure outlays ramp.
Secular tailwinds from data centers, healthcare, semiconductor facilities and large scale infrastructure programs are seen as supporting above average equipment rental demand and a long runway for top line growth.
Improved free cash flow conversion, helped by favorable tax treatment and a less capital intensive growth profile, is viewed as a catalyst for higher long term equity value through debt reduction, buybacks and selective fleet investment.

Bearish Takeaways

Bearish analysts point to recent EBITDA margin compression, both reported and excluding used equipment sales, as a sign that mix, pricing and cost pressures could limit near term earnings leverage.
Some cautious views reflect concerns that a slower macro growth backdrop and normalizing machinery inventories could weigh on rental rates and utilization, constraining upside to current valuation assumptions.
At least one underweight target in the $600 range signals skepticism that current earnings power is sustainable through a full cycle, with downside risk if construction activity rolls over faster than expected.
There is also recognition that the stock has already re rated meaningfully, leaving less room for multiple expansion if execution stumbles or if secular tailwinds from policy driven spending prove less durable than projected.

What's in the News

Citi raised its price target on United Rentals to $1,140 from $1,130 while maintaining a Buy rating. The firm updated its model after Q3 results, applying a slightly higher valuation multiple while trimming 2025 adjusted EBITDA expectations (Periodicals).
United Rentals increased its full year 2025 total revenue guidance to a range of $16.0 billion to $16.2 billion, up from the prior outlook of $15.8 billion to $16.1 billion, signaling confidence in sustained demand across its rental portfolio (Key Developments).
The company repurchased 687,660 shares, or about 1.07 percent of shares outstanding, for $616.64 million between July 1 and September 30, 2025, completing a broader buyback program totaling 1,283,475 shares, or 1.98 percent, for $1.03 billion under the authorization announced on April 23, 2025 (Key Developments).

Valuation Changes

Fair Value Estimate, reduced modestly to about $1,007 from roughly $1,025, reflecting a slight recalibration of assumptions rather than a change in long term outlook.
Discount Rate, edged up slightly to approximately 8.58 percent from about 8.56 percent, modestly increasing the hurdle rate applied to future cash flows.
Revenue Growth, ticked up marginally to around 7.07 percent from roughly 7.07 percent previously, indicating a very small upward adjustment to top line expectations.
Net Profit Margin, was effectively unchanged, easing fractionally to about 18.18 percent from approximately 18.18 percent, implying a stable profitability profile.
Future P/E, declined slightly to roughly 21.0 times from about 21.3 times, signaling a modestly lower multiple applied to forward earnings.

United Rentals is driving revenue growth through operational excellence, innovation, Specialty business expansion, and strategic cross-selling.
A robust share repurchase program and healthy market demand are poised to bolster EPS and profitability.
The company's reliance on large projects and high CapEx commitments could pose risks to financial flexibility and growth if conditions worsen.

Catalysts

About United Rentals

Through its subsidiaries, operates as an equipment rental company.What are the underlying business or industry changes driving this perspective?

United Rentals is positioning itself as the partner of choice with its focus on operational excellence and innovation, which is expected to drive revenue growth in 2025 and beyond.
The company is expanding its Specialty business through new cold starts, which grew 22% year-over-year and 15% pro forma. This growth is anticipated to positively impact both revenue and net margins as the business becomes a larger share of total sales.
The demand for used equipment and strong sales in the first quarter suggest a healthy market environment, which can enhance revenue and maintain profitability through efficient capital allocation.
United Rentals' strategy of being a one-stop shop and leveraging cross-selling opportunities is designed to increase the share of customer spending, enhancing both revenue growth and net margins.
The announced new share repurchase program of $1.5 billion, combined with a solid balance sheet, is expected to support EPS growth through reduced share count and disciplined capital allocation.

United Rentals Earnings and Revenue Growth

United Rentals Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming United Rentals's revenue will grow by 6.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 16.1% today to 18.4% in 3 years time.
Analysts expect earnings to reach $3.5 billion (and earnings per share of $58.04) by about September 2028, up from $2.5 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $2.7 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.9x on those 2028 earnings, down from 24.0x today. This future PE is lower than the current PE for the US Trade Distributors industry at 22.0x.
Analysts expect the number of shares outstanding to decline by 1.95% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.47%, as per the Simply Wall St company report.

United Rentals Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's reliance on large projects for growth might expose it to risks if such projects slow down, impacting rental revenue and overall revenues.
Increased repositioning costs and higher ancillary expenses have contributed to margin compression, which could affect net margins if not managed effectively.
Rising tariffs on new equipment could alter the competitive landscape and cost structure, potentially affecting both cost of goods sold and pricing strategies, impacting EBITDA.
Specialty revenue growth is strong but still constitutes a smaller fraction of the overall business; any slowdown here could affect total revenue growth rates.
The company's high level of current CapEx commitments amidst uncertain macroeconomic conditions could pressure free cash flow and restrict financial flexibility if conditions worsen.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $900.222 for United Rentals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $1075.0, and the most bearish reporting a price target of just $592.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $18.8 billion, earnings will come to $3.5 billion, and it would be trading on a PE ratio of 19.9x, assuming you use a discount rate of 8.5%.
Given the current share price of $945.33, the analyst price target of $900.22 is 5.0% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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