Analyst Note| Dawit Woldemariam |
United Rentals continues to post strong performance, benefiting from strong rental demand. During 2022, the company grew sales by 20% year on year, bringing the total to $11.6 billion. The same factors that we’ve been talking about over the past few quarters were at play. Namely, the tight equipment supply market, which has pushed many construction contractors to rent equipment. While we’re starting to hear positive developments on the supply front from original equipment manufacturers, we believe it’ll take time for new equipment to make its way to contractors. That said, we expect 2023 to be another strong year for United Rentals, leading us to forecast 20% top-line growth. Some of the uplift in sales is related to the company’s recent acquisition of Ahern Rentals, the eighth-largest equipment rental company in North America. Putting these factors together, we elected to raise our fair value estimate to $416, up from $358 previously.