Critical Analysis: United Rentals (NYSE:URI) & Custom Truck One Source (NYSE:CTOS)

United Rentals (NYSE:URI) and Custom Truck One Source (NYSE:CTOS) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Profitability

This table compares United Rentals and Custom Truck One Source’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Rentals 10.87% 29.36% 7.16%
Custom Truck One Source -11.10% N/A -7.41%

Institutional & Insider Ownership

95.7% of United Rentals shares are owned by institutional investors. Comparatively, 78.4% of Custom Truck One Source shares are owned by institutional investors. 0.4% of United Rentals shares are owned by company insiders. Comparatively, 26.3% of Custom Truck One Source shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for United Rentals and Custom Truck One Source, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Rentals 2 7 9 0 2.39
Custom Truck One Source 0 0 1 0 3.00

United Rentals currently has a consensus target price of $288.50, suggesting a potential downside of 4.89%. Given United Rentals’ higher possible upside, research analysts plainly believe United Rentals is more favorable than Custom Truck One Source.

Valuation & Earnings

This table compares United Rentals and Custom Truck One Source’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Rentals $8.53 billion 2.57 $890.00 million $17.44 17.39
Custom Truck One Source $302.74 million 7.64 -$21.28 million ($0.91) -10.33

United Rentals has higher revenue and earnings than Custom Truck One Source. Custom Truck One Source is trading at a lower price-to-earnings ratio than United Rentals, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

United Rentals has a beta of 2.06, indicating that its share price is 106% more volatile than the S&P 500. Comparatively, Custom Truck One Source has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Summary

United Rentals beats Custom Truck One Source on 11 of the 14 factors compared between the two stocks.

United Rentals Company Profile

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power and Fluid Solutions. The General Rentals segment rents general construction and industrial equipment, including backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools. It serves construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. The Trench, Power and Fluid Solutions segment rents specialty construction products that include trench safety equipment, which comprise trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; and power, as well as heating, ventilating, and air conditioning equipment, including portable diesel generators, electrical distribution equipment, and temperature control equipment. It is also involved in the rental of fluid solutions equipment primarily used for fluid containment, transfer, and treatment. This segment serves construction companies involved in infrastructure projects, and municipalities and industrial companies. The company also sells aerial lifts, reach forklifts, telehandlers, compressors, and generators; construction consumables, tools, small equipment, and safety supplies; and parts for equipment that is owned by its customers, as well as provides repair and maintenance services. United Rentals, Inc. sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers. As of January 1, 2021, the company operated a network of 1,165 rental locations, including 1,018 of these locations are in the United States, 136 are in Canada, and 11 are in Europe. United Rentals, Inc. was founded in 1997 and is headquartered in Stamford, Connecticut.

Custom Truck One Source Company Profile

Custom Truck One Source, Inc. provides specialty equipment, parts, tools, accessories, and services to the electric utility transmission and distribution, telecommunications, and rail industries in North America. It operates through two segments: Equipment Rental and Sales; and Parts, Tools and Accessories. The company offers specialized equipment to various customer base for the maintenance, repair, upgrade, and installation of critical infrastructure assets, including electric lines, telecommunications networks, and rail systems. As of March 8, 2021, it had a coast-to-coast rental fleet of approximately 4,500 units comprising insulated and non-insulated bucket trucks, digger derricks, line equipment, cranes, pressure diggers and drills, underground equipment, aerial devices, boom trucks, stringing gear, and hi-rail equipment, as well as repair parts, tools, and accessories. The company was formerly known as Nesco Holdings, Inc. and changed its name to Custom Truck One Source, Inc. in April 2021. Custom Truck One Source, Inc. was founded in 1988 and is based in the Kansas City, Missouri.

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