United Rentals, Inc. (URI) Results Don’t Bode Well for Equipment Manufacturers

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After the warning on earnings, analysts have slashed earnings for 2013 to below $2 and close to year ago earnings. The forecast is still for $3 in 2014, which would make the stock appealing at these levels, but no indications exists that a global rebound in equipment will take place to justify earnings jumping 50%.

Manitowoc Company, Inc. (NYSE:MTW) as well trades at a compelling forward multiple, but investors have to assume a significant jump in earnings in 2014. The current expectations are for more than a 100% jump from 2012 to 2014, which doesn’t appear plausible based on the global economy for equipment. The stock trades only a dollar off 52-week highs, suggesting the inability to reach the significant earnings growth would send the stock lower.

Bottom line

While Terex Corporation (NYSE:TEX) gained 3.5% on the day and Manitowoc Company, Inc. (NYSE:MTW)saw minor gains following the upbeat results from United Rentals, Inc. (NYSE:URI), those numbers don’t suggest improved results from the prior two. If anything it backs up the claimed slowdown in North America from Terex. Not to mention both Terex and Manitowoc are global manufactures as dependent on European, Asian, and Middle Eastern growth as the U.S. If investors like the United Rentals results, that stock should be bought in place of manufacturers already struggling from the global slowdown.

The article United Rentals Results Don’t Bode Well for Equipment Manufacturers originally appeared on Fool.com and is written by Mark Holder.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool owns shares of Terex. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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