United Rentals’ third quarter results drew a negative market reaction, with shares declining after non-GAAP earnings per share came in below Wall Street expectations. Management attributed the quarter’s revenue gains to robust demand across both its General Rental and Specialty segments, particularly from large infrastructure and nonresidential construction projects. However, President and CEO Matthew Flannery acknowledged that increased costs related to fleet repositioning and higher delivery expenses weighed on margins, stating, “our growth is coming with some additional costs.” The company also pointed to higher ancillary service activity, such as delivery and setup, as a contributor to the margin contraction.
Is now the time to buy URI? Find out in our full research report (it’s free for active Edge members).
United Rentals (URI) Q3 CY2025 Highlights:
- Revenue: $4.23 billion vs analyst estimates of $4.16 billion (5.9% year-on-year growth, 1.6% beat)
- Adjusted EPS: $11.70 vs analyst expectations of $12.30 (4.9% miss)
- Adjusted EBITDA: $1.95 billion vs analyst estimates of $1.96 billion (46% margin, 0.6% miss)
- The company slightly lifted its revenue guidance for the full year to $16.1 billion at the midpoint from $15.95 billion
- EBITDA guidance for the full year is $7.38 billion at the midpoint, in line with analyst expectations
- Operating Margin: 26.3%, down from 28.1% in the same quarter last year
- Organic Revenue rose 5.9% year on year vs analyst estimates of 4.5% growth (141.4 basis point beat)
- Market Capitalization: $55.72 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From United Rentals’s Q3 Earnings Call
- David Raso (Evercore ISI) asked whether the increase in capital expenditures was pulling forward demand from 2026. CEO Matthew Flannery clarified that the acceleration was to meet current project demand, not future pull-forward, and that 2026 is still expected to be a growth year.
- Robert Wertheimer (Melius Research) questioned whether higher fleet repositioning costs are a temporary or permanent feature. Flannery responded that costs are tied to the geographic dispersion of large projects, which is a structural change, but each move is evaluated for operational efficiency.
- Jamie Cook (Trust Securities) pressed on whether the growing share of ancillary services could be offset by higher rental rates. CFO Ted Grace stated that ancillary growth is strategically necessary but dilutive, and it remains to be seen if market strength will allow for higher rates to counteract cost headwinds.
- Kenneth Newman (KeyBanc Capital Markets) asked how the company balances fleet growth with efforts to reduce delivery costs. Flannery explained that improved customer communication and better fleet planning should help, but some inefficiency is unavoidable with dynamic project needs.
- Sabahat Khan (RBC Capital Markets) sought clarity on whether the rise in large projects means the industry needs new government funding. Grace replied that while federal infrastructure funding is helpful, ongoing state, local, and private investments also support project activity.
Catalysts in Upcoming Quarters
Over the next few quarters, our team will focus on (1) tracking the pace of large infrastructure and nonresidential project wins and their impact on fleet utilization, (2) monitoring whether ancillary and delivery costs can be better managed or offset, and (3) watching for signs of improvement in local market activity as interest rates and macro conditions evolve. Execution around Specialty expansion and capital allocation will also be critical.
United Rentals currently trades at $878, down from $991.78 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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