United Rentals

Methodology

United Rentals' fair value calculation is challenging due to the highly cyclical nature of construction and industrial equipment demand, where earnings swing dramatically with economic conditions and construction activity. The method works best when normalized for mid-cycle utilization rates and pricing, as peak periods precede downturns while trough earnings often signal opportunity. Investors should focus on replacement cost of the rental fleet and returns on invested capital rather than relying solely on current P/E multiples.

Methodology

PEG ratios for United Rentals are highly misleading because growth rates fluctuate violently with construction cycles, creating unreliable inputs during both boom and bust periods. Low PEG ratios during earnings surges typically signal late-cycle peaks when utilization is elevated, while high ratios during downturns may represent attractive entry points if market share and competitive position remain strong. Investors should compare PEG to historical cycle averages and emphasize fleet productivity and pricing power over current growth rates.

Methodology

United Rentals pays no dividend, as management prioritizes reinvesting cash flow in fleet expansion, bolt-on acquisitions, and share buybacks to build scale advantages in equipment rental markets. PEGY therefore equals PEG with no yield component, reflecting the company's growth and consolidation-focused capital allocation strategy. For United Rentals investors, evaluating utilization trends, pricing power, and competitive positioning matters far more than dividend income.