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Why United Rentals Stock Gained 22% in January

By Demitri Kalogeropoulos – Updated Apr 23, 2019 at 10:03AM

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Investors liked what they saw in the equipment giant's latest earnings report.

What happened

United Rentals (URI -3.62%) trounced the market last month as the stock gained 22%, compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally removed only a small portion of recent losses for shareholders, and the stock remains lower by 25% in the past year.

Check out the latest United Rentals earnings call transcript.

A man standing on an aerial work platform.

Image source: Getty Images.

So what

Investors were pleasantly surprised by the equipment rental giant's fourth-quarter earnings report that in late January showed steady operating improvements. United Rentals achieved 17% higher rental volumes and a 2% uptick in rates, which allowed pre-tax earnings to rise at a healthy clip. "We delivered strong fourth quarter results," CEO Michael Kneeland said in a press release, "including broad growth and rental rate improvement in a year that leveraged our numerous competitive advantages."

Now what

Kneeland and his team are hoping to lean on those advantages to push sales up to between $9.15 billion and $9.55 billion in 2019 from $8 billion in 2018. If it pairs those gains with further improvements in rental rates and return on invested capital, then shareholders could see more market-thumping growth from this beaten-down stock, especially if tariffs lessen their impact on United Rental's cost structure over time.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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United Rentals, Inc. Stock Quote
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