Why Is United Rentals (URI) Down 15.8% Since Last Earnings Report?

Core Viewpoint - United Rentals reported mixed Q3 2025 results, with earnings per share (EPS) missing estimates while revenues exceeded expectations, indicating a complex performance landscape for the company [2][5]. Financial Performance - Adjusted EPS was $11.70, missing the Zacks Consensus Estimate of $12.49 by 6.3%, and decreased 0.8% year-over-year from $11.80 [5]. - Total revenues reached $4.229 billion, surpassing the consensus mark of $4.157 billion by 1.7%, and grew 5.9% year-over-year [5]. - Equipment Rentals revenues increased 5.8% year-over-year to $3.665 billion, marking a record high for the third quarter [6]. Segment Performance - General Rentals segment revenues grew 3.1% year-over-year to a record $2.4 billion, but rental gross margin contracted 90 basis points to 36.7% [8]. - Specialty segment revenues improved 11.4% year-over-year to a record $1.265 billion, although rental gross margin contracted 490 basis points to 45.1% due to higher depreciation expenses [9]. Margins and EBITDA - Total equipment rentals' gross margin contracted 200 basis points year-over-year to 39.6% [10]. - Adjusted EBITDA grew 2.2% year-over-year to $1.946 billion, but the adjusted EBITDA margin contracted 170 basis points to 46% [11]. Balance Sheet and Cash Flow - As of September 30, 2025, cash and cash equivalents were $512 million, with total liquidity at $2.452 billion and long-term debt at $12.6 billion [12]. - Net cash from operating activities improved 12.5% year-over-year to $3.934 billion, while free cash flow decreased 1.6% year-over-year to $1.192 billion [13]. Share Repurchase and Dividends - The company completed a $1.5 billion share repurchase program and initiated a new $2 billion program, repurchasing $1.28 billion worth of common stock and distributing $350 million in dividends [14]. 2025 Guidance - Total revenues are now expected to be in the range of $16-$16.2 billion, an increase from the previous expectation of $15.8-$16.1 billion [15]. - Adjusted EBITDA is projected to be between $7.325 billion and $7.425 billion, up from the earlier estimate of $7.3 billion to $7.45 billion [15]. - Free cash flow is expected to be in the range of $2.1-$2.3 billion, revised down from the prior expectation of $2.4-$2.6 billion [17]. Market Sentiment - Recent estimates for the stock have been trending downward, leading to a Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the coming months [18][20].