Is United Rentals, Inc. (URI) Destined for Greatness?

United Rentals recently acquired RSC Rentals, and is still integrating the acquisition. That expanded the company’s footprint across North America, and absorbing a competitor also reduced costs and helped drive revenue growth this year. It has also allowed United Rentals to add higher-margin clients to its base.

United Rentals should also benefit from an uptick in demand from the housing and construction recovery. In addition, United Rentals’ sales force is responsible for 38% of its business, which comes from unassigned accounts that are typically local contractors working on a job-to-job basis. The company has approximately 1,200 outside sales representatives in the field, and it has plans to increase that number by 10% in the next year. By working on growing this 38% base, or otherwise converting some of it into long-term relationships, United Rentals can increase its revenue and profit.

Last quarter, United Rentals, Inc. (NYSE:URI)’ revenue spiked by 68%, to $1.1 billion, but EPS only moved higher by 12%. This growth is expected to continue as the firm targets recovering heavy-equipment using customers, namely the industrial, construction, manufacturing, and utility homeowner segments, as well as government entities. Customers increasingly prefer to rent equipment rather than buying it, a result of the caution created by this recession-scarred economy. According to the American Rental Association, the forecasted growth rate for the equipment rental industry is more than four times expected 2013 GDP growth in the United States. Even though United Rentals isn’t perfect now, it has plenty of evident opportunities to improve.

Putting the pieces together
Today, United Rentals has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is United Rentals Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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