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Why U-Haul Parent Amerco's Stock Gained 11% in September

By Beth McKenna - Oct 5, 2019 at 4:40PM

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Shares of the do-it-yourself moving leader left the market's return in the dust last month.

What happened

In September, shares of U-Haul parent Amerco ( UHAL 0.54% ) jumped 10.9% -- 11% if we include dividends -- according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 1.9% last month.

In 2019, Amerco stock has returned 15.9% through Oct. 4, slightly trailing the broader market's 19.6% return. Since 2016, shares have been taken a cue from singer Aimee Mann and have been driving sideways, but the stock remains a big winner over periods longer than six years.

A young woman and young man unloading a sofa from a truck with a house in the background.

Image source: Getty Images.

So what

There doesn't seem to be a company-specific catalyst for Amerco stock's upward move in September. One possibility is that last month's rise was simply a recovery from August's drop, which some investors may have considered an overreaction. In that month, shares declined 9.4%, whereas the broader market fell less than 2%. There doesn't appear to be a company-specific driver for that monthly movement either. It's likely that macroeconomic concerns -- specifically about a slowing economy -- were a factor in Amerco stock's August decline.

While Amerco did report quarterly results in early August, that event wasn't the catalyst for the stock's monthly drop. The market shrugged off the results, with shares of Amerco slipping less than 0.1% the day after the release.

In fiscal first-quarter 2020, the company's revenue increased 5.9% year over year to $1.08 billion, driven by a 14% jump in self-storage revenue, which landed at $98.3 million. Revenue in Amerco's core business -- self-moving equipment rental -- grew 4.5% to $748.6 million. Net income edged up 3.6% to $132.4 million, which translated into a 3.5% rise in earnings per share (EPS) to $6.76. Wall Street had been looking for EPS of $7.60 on revenue of $1.05 billion. So the company beat on the top line but fell short on the bottom line. Given that only two analysts typically provide quarterly estimates, investors should pay less attention to the consensus estimates than usual.

Now what

Amerco investors shouldn't have long to wait for material news. While the company hasn't yet set a date, it should be releasing its fiscal second-quarter results in early or mid November. For Q2, Wall Street is currently expecting revenue to grow 1.7% year over year to $1.12 billion and EPS to increase 7.1% to $8.94.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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