United Rentals, Inc.: Mix to Drive Margin Expansion Next Year; Raising Dec 26 PT to $1,235

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United Rentals, Inc.: Mix to Drive Margin Expansion Next Year; Raising Dec 26 PT to $1,235

math. Hence, we don’t expect URI’s valuation to de-rate Adj. EBITDA - 26E ($ mn) 7,832 8,020 2.4%

despite hovering near all-time highs, given the top line KPI’s are accelerating Adj. EBITDA - 27E ($ mn) 8,473 8,670 2.3%

while there’s a path to margin expansion next year. We are raising our estimates

Quarterly Forecasts (FYE Dec)

to reflect the 2Q beat and updated guidance and are modeling FY26/27 total

Adj. EPS ($)

revenue of $17.65B and $19.06B (up ~10%/~8% YoY), respectively, with adj. 2025A 2026E 2027E

EBITDA of $8.02B and $8.67B at both 45.5% and 45.5% margins, respectively. Q1 8.86 9.71A

We are raising our Dec 26 PT to $1,235 based on ~10.5x FY1 EV/EBITDA, in line Q2 10.47 12.76A

Q3 11.70 13.85

with the current valuation. We rate URI Overweight. Q4 11.09 11.84

FY 42.72 48.40 54.30

Lateral for UW-rated SUNB. While URI’s EBITDA margin missed consensus by

10bps, it was notably better than SUNB’s ~90bps miss in the most recent quarter. Style Exposure

URI’s acceleration in time utilization and Specialty/Ancillary revenue growth are

positive indicators for the rental industry and SUNB, but they should be viewed

as incremental evidence that SUNB’s FY27 guidance of flattish EBITDA

margin YoY is probably unachievable. Hence, we don’t expect SUNB’s

valuation to close the gap vs. URI’s. We reiterate our Underweight rating on SUNB

with a Dec 26 PT of $74 using ~7.5x FY1 EV/EBITDA. Below are some other

highlights from the URI earnings call.

• Construction and end-market demand remained strong in 2Q, with

construction led by non-residential and infrastructure, industrial supported by

The authors wish to thank Prerana continued DD% growth in power and healthy metals/minerals activity, and