Factors Setting the Tone for United Rentals' Q3 Earnings

Core Viewpoint - United Rentals, Inc. is expected to report its third-quarter 2024 results on October 23, with adjusted earnings projected to increase by 6.5% year-over-year, while revenues are anticipated to grow by 6.1% [1][2]. Revenue Estimates - The Zacks Consensus Estimate for third-quarter adjusted earnings is $12.49 per share, up from $12.46 over the past 60 days, compared to $11.73 per share in the same quarter last year [2]. - Revenue estimates for the third quarter are set at $3.99 billion, reflecting a 6.1% increase from the prior-year quarter [2]. Factors Influencing Quarterly Results - Growth in the Specialty business, which contributed 29.7% to total revenues in the second quarter, is expected to drive revenues, alongside disciplined capital allocation [3]. - Challenges in the General Rentals segment, which accounted for 70.3% of total revenues in the second quarter, are noted due to local market dynamics and normalization of used equipment margins [3][4]. Segment Performance - General Rentals revenues are projected to increase by 6.2% to $2.92 billion, while Specialty revenues are expected to rise by 6.7% to $1.08 billion [5]. - Equipment Rentals, which made up 85.2% of total revenues in the second quarter, is anticipated to see a 5.1% year-over-year revenue increase to $3.39 billion [5]. Earnings and Margins - Adjusted EBITDA is expected to grow by 3.3% year-over-year to $1.91 billion, although the adjusted EBITDA margin is projected to decline to 47.7% from 49.1% a year ago [7]. - Gross margin is anticipated to contract to 41.3% from 42.1% in the previous year [7]. Strategic Developments - The acquisition of Yak is likely to enhance United Rentals' position in the North American matting industry and boost the Specialty segment's performance [6]. - The company has shifted focus and capital expenditure towards its Specialty business, investing in fleet expansion to improve margins and growth opportunities [4][6]. Earnings Prediction - The model indicates a potential earnings beat for United Rentals, supported by a positive Earnings ESP of +0.51% and a Zacks Rank of 3 (Hold) [8].