United Rentals (NYSE:URI) versus Shimizu (OTCMKTS:SHMUY) Critical Analysis

United Rentals (NYSE:URI) and Shimizu (OTCMKTS:SHMUY) are both construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.

Dividends

United Rentals pays an annual dividend of $7.16 per share and has a dividend yield of 0.8%. Shimizu pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. United Rentals pays out 18.4% of its earnings in the form of a dividend. Shimizu pays out 19.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. United Rentals has increased its dividend for 3 consecutive years.

Profitability

This table compares United Rentals and Shimizu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Rentals	15.83%	31.30%	9.61%
Shimizu	5.05%	3.76%	1.40%

Institutional and Insider Ownership

96.3% of United Rentals shares are held by institutional investors. 0.5% of United Rentals shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

United Rentals has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Shimizu has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Earnings and Valuation

This table compares United Rentals and Shimizu”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Rentals	$15.35 billion	3.82	$2.58 billion	$38.88	23.69
Shimizu	$12.77 billion	0.64	$435.70 million	$3.94	11.08

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

Analyst Recommendations

This is a summary of current recommendations for United Rentals and Shimizu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Rentals	1	4	13	2	2.80
Shimizu	0	0	0	0	0.00

United Rentals currently has a consensus price target of $962.61, indicating a potential upside of 4.49%. Given United Rentals’ stronger consensus rating and higher possible upside, analysts plainly believe United Rentals is more favorable than Shimizu.

Summary

United Rentals beats Shimizu on 17 of the 18 factors compared between the two stocks.

About United Rentals

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals and Specialty. The General Rentals segment rents general construction and industrial equipment includes backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools for construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. The specialty segment rents specialty construction products, including trench safety equipment consists of trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and heating, ventilating, and air conditioning equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment; fluid solutions equipment for fluid containment, transfer, and treatment; and mobile storage equipment and modular office space. This segment serves construction companies involved in infrastructure projects, and municipalities and industrial companies. It 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. The company sells used equipment through its sales force, brokers, website, at auctions, and directly to manufacturers. The company operates in the United States, Canada, Europe, Australia, and New Zealand. United Rentals, Inc. was incorporated in 1997 and is headquartered in Stamford, Connecticut.

About Shimizu

Shimizu Corporation, together with its subsidiaries, engages in the construction, development, engineering, and life cycle valuation businesses in Japan and internationally. The company proposes, plans, designs, builds, repairs, manages, operates, and maintains offices, plants, schools, hospitals, and other buildings, such as nursing homes, rehabilitation centers, temples, shrines, and architectures; offers design, build, and renovation for tunnels, bridges, dams, urban infrastructure, energy facilities, and other public works; provides construction for manufacturing facilities, high-rise buildings, hospitals, bridges, subways, and other projects; and develops and rents real estate properties, including condominiums, data centers, office buildings, logistics facilities, and other properties. It also offers engineering, procurement, and construction services in solar and wind power projects, environmental clean-up engineering, turn-key order fulfillment of plants, and ICT systems and engineering projects. In addition, the company provides facility operation and management services; infrastructure management, maintenance, and concession services; and generates power using renewable energy and sells electricity, as well as involved in commercialization of smart cities and provision of services using ICT technology. Further, it engages in the lease and sale of construction equipment and materials; provision of interior finishing and rebar works; insurance agency, security, and travel agency services; supply of PCR test kits; and rental of various tower cranes, crawler cranes, and other construction machinery and equipment. Additionally, the company offers construction equipment consulting services, such as construction planning, maintenance, and management services; property and building management services; and real estate consulting and brokerage services, as well as tenant leasing services. Shimizu Corporation was founded in 1804 and is headquartered in Tokyo, Japan.