United Rentals (NYSE:URI) versus Armstrong World Industries (NYSE:AWI) Financial Comparison

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for United Rentals and Armstrong World Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Rentals	1	5	9	1	2.63
Armstrong World Industries	0	4	4	0	2.50

United Rentals currently has a consensus price target of $830.7143, suggesting a potential downside of 4.30%. Armstrong World Industries has a consensus price target of $177.1250, suggesting a potential downside of 7.04%. Given United Rentals’ stronger consensus rating and higher possible upside, research analysts plainly believe United Rentals is more favorable than Armstrong World Industries.

Insider and Institutional Ownership

96.3% of United Rentals shares are held by institutional investors. Comparatively, 98.9% of Armstrong World Industries shares are held by institutional investors. 0.5% of United Rentals shares are held by insiders. Comparatively, 1.0% of Armstrong World Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

United Rentals pays an annual dividend of $7.16 per share and has a dividend yield of 0.8%. Armstrong World Industries pays an annual dividend of $1.23 per share and has a dividend yield of 0.6%. United Rentals pays out 18.5% of its earnings in the form of a dividend. Armstrong World Industries pays out 18.2% 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 and Armstrong World Industries has increased its dividend for 1 consecutive years. United Rentals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares United Rentals and Armstrong World Industries”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Rentals	$15.35 billion	3.64	$2.58 billion	$38.67	22.45
Armstrong World Industries	$1.45 billion	5.70	$264.90 million	$6.76	28.19

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

Profitability

This table compares United Rentals and Armstrong World Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Rentals	16.11%	32.01%	9.85%
Armstrong World Industries	18.95%	39.80%	16.79%

Volatility & Risk

United Rentals has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500. Comparatively, Armstrong World Industries has a beta of 1.43, meaning that its stock price is 43% more volatile than the S&P 500.

Summary

United Rentals beats Armstrong World Industries on 10 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 Armstrong World Industries

Armstrong World Industries, Inc., together with its subsidiaries, engages in the design, manufacture, and sale of ceiling and wall solutions in the Americas. It operates through Mineral Fiber and Architectural Specialties segments. The company offers mineral fiber, fiberglass wool, metal, wood, felt, wood fiber, and glass-reinforced-gypsum; ceiling component products, such as ceiling perimeters and trims, as well as grid products that support drywall ceiling systems; ceilings, walls, and facades for use in commercial settings; and manufactures ceiling suspension system (grid) products. It serves commercial and residential construction markets, as well as renovation of existing buildings sectors. The company sells its products to resale distributors, ceiling system contractors, wholesalers, and retailers comprising large home centers. Armstrong World Industries, Inc. was founded in 1860 and is headquartered in Lancaster, Pennsylvania.