Dj United Rentals Inc. Stock Falls 12.9%, Underperforms Market

Equipment rental company United Rentals fell short of the markets revenue expectations in Q4 CY2025 as sales rose 2.8% year on year to $4.21 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $17.05 billion at the midpoint. Its non-GAAP profit of $11.09 per share was 6.1% below analysts’ consensus estimates.

United Rentals (URI) Q4 CY2025 Highlights:

• Revenue: $4.21 billion vs analyst estimates of $4.24 billion (2.8% year-on-year growth, 0.7% miss)
• Adjusted EPS: $11.09 vs analyst expectations of $11.80 (6.1% miss)
• Adjusted EBITDA: $1.90 billion vs analyst estimates of $1.93 billion (45.2% margin, 1.6% miss)
• EBITDA guidance for the upcoming financial year 2026 is $7.7 billion at the midpoint, in line with analyst expectations
• Operating Margin: 25%, down from 26.5% in the same quarter last year
• Market Capitalization: $56.9 billion

StockStory’s Take

United Rentals faced a challenging fourth quarter as the market reacted negatively to its results, with management pointing to a combination of factors behind the underperformance. CEO Matthew Flannery highlighted continued growth in both general rentals and specialty businesses, but noted that higher fleet repositioning costs and mixed performance in the matting business weighed on margins. CFO William Grace attributed the shortfall in used equipment sales to holding onto high-time assets to meet demand, further impacting bottom-line results.

Looking ahead, United Rentals’ guidance for the coming year is based on expectations of steady large project activity, particularly in infrastructure, power, and technology construction. Management emphasized ongoing cost control efforts and investments in technology to offset persistent inflation and delivery expenses. Flannery stated, “We believe in profitable growth, not growth for growth’s sake, and we’re going to make sure the team is focused on protecting margin,” reflecting the company’s cautious approach to balancing expansion with efficiency amid continued uncertainty in local markets.

Key Insights from Management’s Remarks

Management cited strong specialty segment growth and large project activity as key drivers, but acknowledged that margin compression resulted from elevated delivery costs and some project timing delays.

• Specialty segment expansion: Management noted that specialty businesses, including matting and trench safety, saw broad-based growth, with 60 new cold-start locations added during the year. However, a major matting project was delayed, causing near-term revenue and fleet productivity volatility.
• Large projects drive demand: Growth was concentrated in infrastructure, power, and data center verticals, while local market demand remained flat. The project pipeline is described as “larger than ever,” with new starts in healthcare and pharmaceuticals.
• Margin pressures persist: Operating margins declined, largely due to elevated delivery and repositioning costs, which added an estimated 70 basis points of headwind. Ancillary services growth, while strategically important, also diluted margins but increased cash profitability.
• Used equipment sales impacted: The company sold fewer high-time used assets than planned, as strong rental demand led United Rentals to retain equipment longer, particularly in aerial and telehandler categories.
• M&A activity remains disciplined: Small acquisitions in trench, portable sanitation, and aerial products (including expansion in Australia) were completed to fill out the product and geographic footprint, but management stressed that future deals will be carefully evaluated for strategic and financial fit.

Drivers of Future Performance

United Rentals’ outlook is shaped by continued reliance on large, geographically diverse projects and an emphasis on operational efficiency to counteract ongoing cost headwinds.

• Project-driven growth focus: Management expects large-scale infrastructure, power, and technology projects to remain the primary growth drivers, with little anticipated improvement in local market demand. The pipeline of these projects is expected to support consistent revenue expansion.
• Margin protection strategies: The company is implementing additional cost actions, including technology investments aimed at reducing fleet repositioning and delivery expenses, and expects margin benefits to accumulate gradually throughout the year.
• Specialty and ancillary expansion: Ongoing investment in specialty cold-starts and the addition of new product lines are intended to further differentiate United Rentals’ offerings but may continue to dilute reported margins, even as they contribute to higher overall profitability and customer retention.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will track (1) the pace and profitability of specialty segment expansion, especially as new cold-starts come online, (2) the impact of cost-control initiatives and technology investments on operating margins, and (3) continued execution in securing and servicing large project work across key verticals such as infrastructure and power. Monitoring used equipment sales trends and the timing of major project mobilizations will also be crucial for understanding margin recovery.

United Rentals currently trades at $768.68, down from $903.19 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

What Happened?

Shares of equipment rental company United Rentals fell 15.1% in the afternoon session after it reported fourth-quarter financial results that did not meet Wall Street's expectations. 

The company posted revenue of $4.21 billion and adjusted earnings per share of $11.09, both of which fell short of analysts' forecasts. Adding to investor concerns, the company's gross and operating margins also declined compared to the same period last year, signaling pressure on profitability. While United Rentals provided a full-year 2026 outlook that was largely in line with expectations, this failed to reassure investors following the disappointing quarter. The overall weak results from the world's largest equipment rental company prompted a significant sell-off in its shares.

What Is The Market Telling Us

United Rentals’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for United Rentals and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 3.8% on the news that the Dow Jones Industrial Average fell as much as 0.7%, reflecting lingering uncertainty, and capping off a volatile week which saw stocks enjoy some relief as President Donald Trump reduced tensions with European allies by backing off his threat of imposing new tariffs. 

Threats of tariffs initially created uncertainty for businesses, as they can lead to higher costs for multinational corporations and disrupt global supply chains. By withdrawing the threat, the administration removed a significant headwind for the market, prompting a relief rally. This development was a key factor in helping major indexes recover from earlier losses, even as some analysts noted that underlying geopolitical risks and market volatility remain concerns for investors.

United Rentals is down 8.4% since the beginning of the year, and at $774.47 per share, it is trading 24.1% below its 52-week high of $1,020 from October 2025. Investors who bought $1,000 worth of United Rentals’s shares 5 years ago would now be looking at an investment worth $3,187.

What Happened?

Shares of equipment rental company Herc Holdings fell 7.3% in the afternoon session after BofA Securities double-downgraded the stock to "underperform" from "buy," citing impacts from the Hollywood writers and actors strike. 

The investment bank also cut its price target on the stock to $140 from $150 a share. BofA's decision to lower its rating was based on the potential effects of the Hollywood writers and actors strike. The bank expressed concern that prolonged labor disputes in the entertainment industry could reduce the need for Herc's rental equipment, which is frequently used for film and television productions, thereby affecting the company's performance.

What Is The Market Telling Us

Herc’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 4.7% on the news that the Dow Jones Industrial Average fell as much as 0.7%, reflecting lingering uncertainty, and capping off a volatile week which saw stocks enjoy some relief as President Donald Trump reduced tensions with European allies by backing off his threat of imposing new tariffs. 

Threats of tariffs initially created uncertainty for businesses, as they can lead to higher costs for multinational corporations and disrupt global supply chains. By withdrawing the threat, the administration removed a significant headwind for the market, prompting a relief rally. This development was a key factor in helping major indexes recover from earlier losses, even as some analysts noted that underlying geopolitical risks and market volatility remain concerns for investors.

Herc is down 4.8% since the beginning of the year, and at $144.99 per share, it is trading 30.8% below its 52-week high of $209.39 from February 2025. Investors who bought $1,000 worth of Herc’s shares 5 years ago would now be looking at an investment worth $2,266.