Hurricane Katrina has sent a number of stock groups rising, from oil and natural gas producers to cement companies. One company that's also up is troubled UnitedRentals
United Rentals is the largest equipment rental company in the U.S. It offers more than 600 types of equipment for rent, from construction equipment, industrial and heavy machinery, and traffic equipment to items for homeowners. With all the Katrina-related rebuilding expected, United Rentals is certainly well-positioned to help.
Investors, though, are not in a position to do much of an evaluation. The company has not reported complete results since October 2004. The latest SEC filing, which provides only preliminary results for the quarter ended June 30, shows same-store rental revenue up a strong 11.4%. United Rentals also gave 2005 earnings guidance of $1.60 to $1.70 a share, and projected free cash flow of $200 million. Sounds good, right?
The company has been unable to report complete results because it is going to restate periods before 2004. An SEC investigation into its accounting practices has also been gumming up the works.
United Rentals is also having trouble resolving debt problems. It posted $3.14 billion in total debt (as of 2004, of course) and negative 2.1 times interest coverage. (For the latest year data is available, interest expense is two times the company's operating loss.) Debt is a big concern, even when you can show that your business benefits from hurricanes.
The stock was off to a rapid start this morning, up $1.09 (5.5%), but that move was nipped in the bud when Moody's
For the time being, investors may want to focus on Motley Fool Inside Value recommendation Home Depot
If the Fool has helped you profit from investing, consider sharing the wealth with those in need. You can donate to American Red Cross relief efforts for victims of Hurricane Katrina by clicking the banner at the top of this Fool.com page.