Is It Time To Reassess United Rentals (URI) After Strong Multi‑Year Share Price Gains

• If you are wondering whether United Rentals' current share price offers sufficient value for the risk you take, this breakdown will help you frame that question clearly before you commit capital.
• The stock last closed at US$880.88, with returns of 8.8% over 7 days, 12.2% over 30 days, 4.2% year to date, 32.7% over 1 year, and a very large gain over 5 years at about 3.6x.
• Recent coverage has highlighted United Rentals as a key player in equipment rental for construction and industrial projects. This keeps investor attention on how its order trends and capital spending by customers may influence growth expectations. Broader commentary has also focused on how infrastructure activity and large project pipelines could feed into sentiment around the stock.
• On our checks, United Rentals scores 4/6 on valuation, suggesting several metrics flag it as potentially undervalued, although not across the board. Next, we will look at different valuation approaches and then finish with a way to bring them together into a clearer picture for you.

United Rentals delivered 32.7% returns over the last year. See how this stacks up to the rest of the Trade Distributors industry.

Approach 1: United Rentals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash a company is expected to generate in the future, then discounts those projections back into today’s dollars to estimate what the business might be worth now.

For United Rentals, the latest twelve month Free Cash Flow (FCF) is about $1.93b. Using a 2 Stage Free Cash Flow to Equity model based on analyst inputs and extrapolated estimates, projected FCF reaches about $5.41b in 2035, with interim projections such as $2.62b in 2026 and $3.46b in 2028. Simply Wall St discounts these future cash flows and sums them to arrive at an estimated intrinsic value of $1,128.78 per share.

Compared with the recent share price of $880.88, this DCF output implies the stock trades at about a 22.0% discount to that intrinsic estimate. On this model alone, United Rentals screens as undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests United Rentals is undervalued by 22.0%. Track this in your watchlist or portfolio, or discover 884 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for United Rentals.

Approach 2: United Rentals Price vs Earnings

For a profitable company like United Rentals, the P/E ratio is a useful cross check because it ties what you pay directly to the earnings the business is already producing.

In simple terms, higher growth expectations and lower perceived risk usually justify a higher P/E, while slower expected growth or higher risk tend to anchor a lower, more cautious multiple.

United Rentals currently trades on a P/E of about 22.2x. That sits slightly above the Trade Distributors industry average of roughly 21.2x, and just below the peer group average of around 23.6x. To go further, Simply Wall St also calculates a proprietary “Fair Ratio” of 31.2x, which is the P/E they would expect for United Rentals after weighing factors such as its earnings growth profile, industry, profit margins, market cap and risk characteristics.

This Fair Ratio is more tailored than a simple comparison with peers or the industry because it adjusts for company specific qualities rather than assuming all firms deserve the same multiple.

Since the current P/E of 22.2x is meaningfully below the Fair Ratio of 31.2x, this approach points to the shares screening as undervalued on earnings.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your United Rentals Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories you create about a company that link your view of its future revenue, earnings and margins to a financial forecast and then to a fair value that you can easily compare with today’s share price.

On Simply Wall St’s Community page, used by millions of investors, Narratives let you set your own assumptions and see how your fair value stacks up against the current price. This can help you decide whether you see more upside or downside based on your view of United Rentals.

Narratives are updated when new information comes in, such as United Rentals updating guidance or analysts adjusting their fair value from about US$900.22 to roughly US$1,007.90, with price targets ranging from US$592.00 to US$1,075.00. This means you can quickly check whether your story still holds or whether the gap between your fair value and the market price has moved enough to reconsider your position.

Do you think there's more to the story for United Rentals? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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