URI 679.58 (+1.99%)
US9113631090Business ServicesRental & Leasing Services

Last update on 2024-06-06

United Rentals (URI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

United Rentals (URI) Piotroski F-Score Analysis 2023: Strong financial position with a 7/9 score based on profitability, liquidity, and operational efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running United Rentals (URI) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is used to evaluate a company's financial strength. For United Rentals (URI), the Piotroski Score is 7 out of 9. The score evaluates 9 criteria related to profitability, liquidity, and operating efficiency. Profitability metrics include positive net income ($2,424M), positive cash flow from operations ($4,704M), and growing return on assets (0.0974). Liquidity analysis shows a negative trend with a decrease in the current ratio (from 1.1137 to 0.8064) and an increase in leverage (0.4278 to 0.4901). The company has not diluted its shares (outstanding shares dropped from 70,703,000 to 68,470,000), but its gross margin has decreased (from 0.4291 to 0.4056). The last metric, asset turnover, has shown improvement (0.5235 to 0.5759).

Insights for Value Investors Seeking Stable Income

United Rentals (URI) has a strong Piotroski Score of 7, indicating good financial health and operations. However, there are concerns about liquidity and leverage, which investors should consider. If you're looking for a solid, profitable company with good operational efficiency, URI could be a good choice for your investment portfolio, but keep an eye on its debt levels and liquidity.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of United Rentals (URI)

Company has a positive net income?

Check if the net income for 2023 is positive. If positive, add 1 point; otherwise, set it to 0.

Historical Net Income of United Rentals (URI)

The net income for United Rentals (URI) in 2023 is $2,424,000,000, which is indeed positive. This is a key indicator of profitability and financial health for the company. Over the past two decades, URI's net income has shown significant growth, especially when comparing early years with substantial losses (e.g., -$244,310,000 in 2003) to the consistent and increasing profits in recent years. The net income in 2023 being the highest to date marks a positive trend. Therefore, for this criterion, URI earns 1 point for positive net income.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the amount of cash a company generates from its normal business operations. It is a vital measure of financial health.

Historical Operating Cash Flow of United Rentals (URI)

For United Rentals (URI) in 2023, the Cash Flow from Operations (CFO) is $4,704,000,000, which is positive. Examining historical data, CFO has generally been on an upward trajectory over the last 20 years, starting from $342,306,000 in 2003 to $4,704,000,000 in 2023. This demonstrates consistent growth in operational efficiency and robustness in cash generation. Therefore, this criterion warrants an addition of 1 point for a positive trend. Such sustained positivity in CFO is a strong indicator of the firm's operational success and its ability to generate ample cash to meet financial obligations and fund further investments.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company’s ability to generate profit from its assets. An increasing ROA over time indicates improved efficiency and profitability, making it a crucial metric in the Piotroski Score analysis, contributing positively to investor confidence and company valuation.

Historical change in Return on Assets (ROA) of United Rentals (URI)

United Rentals (URI) saw its ROA increase from 0.0947 in 2022 to 0.0974 in 2023, resulting in a positive score of 1 for this criterion. This increment indicates a trend of improving profitability and operational efficiency. While URI's ROA still trails behind the industry median of 0.4056 in 2023, this positive movement is a step in the right direction. Over the last 20 years, URI's operating cash flow has also shown a consistent upward trajectory, reaching an impressive $4.704 billion in 2023, further substantiating its enhanced financial performance and operational efficiency.

Operating Cashflow are higher than Netincome?

why cash flow higher than net income is good and important to consider

Historical accruals of United Rentals (URI)

In 2023, United Rentals reported an operating cash flow of $4,704 million, significantly higher than its net income of $2,424 million.

Liquidity of United Rentals (URI)

Leverage is declining?

Comparing the leverage ratio of a company annually helps to understand its financial risk, as a higher leverage implies more debt relative to equity.

Historical leverage of United Rentals (URI)

For United Rentals (URI), the leverage ratio has increased from 0.4278 in 2023 compared to 0.4901 in 2022. This trend is not favorable as it suggests that the company is taking on more debt relative to its equity. Analyzing the data of the last 20 years, URI has seen fluctuations in leverage, reaching its peak in 2008 with a leverage ratio of 0.795 and the lowest at 0.4278 in 2023. The latest increase in leverage indicates a reversal in the recent trend of reducing leverage since 2015, which could be a cause for concern for debt risk management.

Current Ratio is growing?

The change in current ratio compares the company's ability to cover its short-term obligations over time.

Historical Current Ratio of United Rentals (URI)

Between 2022 and 2023, United Rentals (URI)'s Current Ratio decreased from 1.1137 to 0.8064. This marks a downward trend, indicating a reduced ability to cover short-term liabilities with short-term assets. A consistent decline may indicate liquidity issues. Compared to the industry median in 2023, which stands at 1.3623, URI's decline is more concerning. Hence, the criterion results in 0 points.

Number of shares not diluted?

The criterion evaluates whether a company's outstanding shares have decreased. A decline in outstanding shares typically signals share buybacks, a positive indicator of returning value to shareholders.

Historical outstanding shares of United Rentals (URI)

For United Rentals (URI), the outstanding shares have decreased from 70,703,000 in 2022 to 68,470,000 in 2023. This reduction amounting to approximately 3.2% suggests that the company has possibly engaged in share buybacks, which can be a sign of confidence from the management in the company's future performance. Historically, observing United Rentals' shares from 2003 to 2023, there's a general downward trend with intermittent periods of increase, indicative of active management of the share structure. Given this positive outcome, URI gains 1 point for this Piotroski criterion.

Operating of United Rentals (URI)

Cross Margin is growing?

Change in Gross Margin measures the difference in the percentage of profit made from revenue. It's crucial as it indicates how efficiently a company manages its production costs relative to revenue.

Historical gross margin of United Rentals (URI)

In 2023, United Rentals (URI) posted a Gross Margin of 0.4056, which is lower than the Gross Margin of 0.4291 in 2022. This represents a decrease and thus results in a score of 0 for this criterion. Historically, the Gross Margin values have shown variability: peaking at 0.4321 in the mid-2000s and dipping significantly to 0.2587 in 2009, reflecting challenges during economic downturns. Comparing this to the industry's median Gross Margin of 0.4056 in 2023 indicates that URI slightly aligns with industry performance, emphasizing no significant competitive disadvantage or edge recently.

Asset Turnover Ratio is growing?

The Asset Turnover ratio measures a company's ability to generate sales from its assets. An increasing ratio suggests better utilization of assets.

Historical asset turnover ratio of United Rentals (URI)

For United Rentals (URI), the Asset Turnover increased from 0.5235 in 2022 to 0.5759 in 2023. This is a positive trend, as it indicates that the company is using its assets more efficiently to generate revenue. URI's historical data over the past 20 years reveals fluctuations, but the recent increase suggests a favorable development in asset utilization. With an increase in 2023, 1 point is added for this criterion.


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