Financial Comparison: Arcosa (NYSE:ACA) vs. United Rentals (NYSE:URI)

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

Insider and Institutional Ownership

96.3% of United Rentals shares are held by institutional investors. Comparatively, 90.7% of Arcosa shares are held by institutional investors. 0.5% of United Rentals shares are held by company insiders. Comparatively, 2.0% of Arcosa shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for United Rentals and Arcosa, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Rentals	1	3	12	2	2.83
Arcosa	0	1	3	0	2.75

United Rentals presently has a consensus target price of $925.59, suggesting a potential upside of 24.27%. Arcosa has a consensus target price of $120.00, suggesting a potential upside of 14.58%. Given United Rentals’ stronger consensus rating and higher possible upside, research analysts clearly believe United Rentals is more favorable than Arcosa.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
United Rentals	15.49%	30.35%	9.27%
Arcosa	7.23%	8.64%	4.41%

Volatility & Risk

United Rentals has a beta of 1.66, meaning that its stock price is 66% more volatile than the S&P 500. Comparatively, Arcosa has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500.

Valuation and Earnings

This table compares United Rentals and Arcosa”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Rentals	$16.10 billion	2.91	$2.49 billion	$38.68	19.26
Arcosa	$2.88 billion	1.78	$208.40 million	$4.24	24.70

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

Dividends

United Rentals pays an annual dividend of $7.88 per share and has a dividend yield of 1.1%. Arcosa pays an annual dividend of $0.20 per share and has a dividend yield of 0.2%. United Rentals pays out 20.4% of its earnings in the form of a dividend. Arcosa pays out 4.7% 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 raised its dividend for 3 consecutive years. United Rentals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

United Rentals beats Arcosa on 15 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 Arcosa

Arcosa, Inc., together with its subsidiaries, provides infrastructure-related products and solutions for the construction, engineered structures, and transportation markets in the United States. It operates through three segments: Construction Products, Engineered Structures, and Transportation Products. The Construction Products segment offers natural and recycled aggregates; specialty materials; and construction site support equipment, including trench shields and shoring products for residential and non-residential construction, and specialty/other products, as well as for infrastructure construction. The Engineered Structures segment offers utility structures, wind towers, traffic structures, and telecommunication structures for electricity transmission and distribution, wind power generation, highway road construction, and wireless communication markets. The Transportation Products segment offers inland barges, fiberglass barge covers, winches, marine hardware, and steel components for railcars and transportation equipment; cast components for industrial and mining sectors; and axles, circular forgings, and coupling devices for freight, tank, locomotive, and passenger rail transportation equipment, as well as other industrial uses. Arcosa, Inc. was incorporated in 2018 and is headquartered in Dallas, Texas.