What happened
Shares of equipment-rental company United Rentals (URI 0.67%) soared on Thursday after reporting finalized financial results for 2022. As of this writing at 2:30 p.m. EST, United Rentals hit $430.15 per share earlier in the trading session, according to Yahoo! Finance, which was an all-time high and up 9.6% from where the stock closed yesterday.
So what
For 2022, United Rentals generated revenue of $11.6 billion and earned $3.2 billion in operating income for a stellar operating margin of almost 28%. According to CEO Matthew Flannery, these are all record results.
United Rentals historically has been an acquirer of similar businesses in the equipment-rental space. And 2022 results were boosted by the 2021 acquisition of General Finance.
When it doesn't have an attractive acquisition target, United Rentals management returns a lot of money to shareholders via share repurchases. The company acquired Ahern Rentals in December, which temporarily placed share repurchases on hold. But with the integration going well, management today announced it planned on buying back $1 billion in stock during 2023 -- a substantial amount for a company with a market capitalization of about $30 billion.
The big surprise, however, is that United Rentals is starting to pay a dividend. It plans to pay $1.48 per share quarterly, with the first dividend coming in February. This translates to a forward yield of about 1.2% from where the stock trades right now. Not bad for just getting started.
Now what
United Rentals also issued guidance for 2023 with its financial report. For 2023, the company expects to generate revenue of $13.7 billion to $14.2 billion, which would be about an 18% to 22% year-over-year jump. However, management says that its operating income could be flat in 2023 compared to 2022 despite the robust top-line gains.
That's certainly one area of concern that United Rentals shareholders can watch going forward for this company that otherwise looks to be doing all the right things.
