Stocks in equipment rental companies united rentals (URI 9.44%) Yahoo! surged on Thursday after reporting final 2022 earnings, according to Yahoo! Finance hit an all-time high, up 9.6% from yesterday’s close.
In 2022, United Rentals will have revenues of $11.6 billion and operating profit of $3.2 billion, achieving an impressive operating margin of approximately 28%. According to CEO Matthew Flannery, these are all record results.
United Rentals has historically acquired similar businesses in the equipment rental space. The 2022 results were also boosted by the acquisition of General Finance in 2021.
In the absence of attractive acquisition targets, United Rentals management will return significant amounts of money to shareholders through share buybacks. The company acquired his Ahern Rentals in December, temporarily putting its stock buybacks on hold. However, with the integration well underway, management announced today that he plans to buy back his $1 billion stake in 2023.
But the big surprise is that United Rentals has started paying dividends. Quarterly he will pay $1.48 per share, with the first dividend he will pay in February. This translates to a forward yield of around 1.2% from where the stock currently trades. Not bad if you’re just starting out.
United Rentals has also issued guidance for 2023 along with its financial report. In 2023, the company expects he will generate $14.2 billion in revenue from $13.7 billion, an increase of about 18% to 22% year over year. However, management said operating profit could be flat in 2023 compared to 2022 despite strong top-line earnings.
It’s certainly one of the concerns that United Rentals shareholders can focus on going forward for a company that otherwise seems to be doing everything right.
Jon Quast holds a position at United Rentals. The Motley Fool has no positions in any of the companies mentioned. The Motley Fool’s U.S. headquarters has a disclosure policy.