Sunbelt Rentals Holdings, Inc. (SUNB)

Price£49.76Cached quoteAs of 2026-09-06 09:31 UTC

AI: Fair-priced

Price checkThe shares look fairly priced because solid cash generation offsets a demanding earnings multiple.

The latest regular-session close values Sunbelt at about 24 times fiscal 2026 reported earnings per share of $3.15 and about 20.5 times adjusted earnings per share of $3.72, which excludes specified non-core items. Free cash flow, meaning cash left after operations and net equipment spending, was $2.055 billion. That implies roughly 15 times recent free cash flow, or a 6.6% cash yield. These figures are reasonable, but not bargain-level, given rising fleet spending and softer margins.

Big pictureCash stayed resilient as profits fell, but recent free cash flow benefited from lower fleet spending.

Operating cash flow remained unusually steady at $3.784 billion in fiscal 2026, versus $3.844 billion in 2025 and $3.664 billion in 2024. Net income nevertheless fell 15% to $1.325 billion. Free cash flow rose to $2.055 billion from $1.675 billion, largely as rental-equipment purchases fell to $1.842 billion from $2.251 billion; they were $3.759 billion in 2024, when free cash flow was only $126 million. That history shows durable operating cash generation, but also substantial sensitivity to the fleet-investment cycle.

Business strengthSunbelt combines strong rental momentum with manageable debt and a share count that keeps shrinking.

Fiscal 2026 rental revenue grew 3.4% to $10.32 billion, while fourth-quarter rental revenue accelerated 8%; North America Specialty grew 15.1%. Net debt was $7.554 billion at April 30, with management's debt measure equal to 1.6 times adjusted operating earnings before interest, taxes, depreciation and amortization, inside its 1-to-2-times target. Buybacks totaled $1.413 billion and dividends $464 million, while shares outstanding fell about 4.7% year over year. The trade-off is that those distributions consumed most of fiscal 2026 free cash flow.

What could change the storyFaster growth and margin recovery would help, while rising fleet spending could weaken near-term cash returns.

Management expects fiscal 2027 rental revenue to grow 5% to 8% and adjusted EBITDA, a profit measure before interest, taxes, depreciation and amortization, to reach $4.85 billion to $5.05 billion from $4.68 billion. The bull case is sustained Specialty growth, Reliant acquisition gains and recovering profitability. The bear case is that net rental-equipment spending rises to $2.05 billion-$2.45 billion while margins remain below fiscal 2025 levels. At current valuation multiples, moderate growth and steadier margins appear necessary; flat earnings and weaker cash generation would make the price harder to justify.

AI: News

Results reset expectationsFiscal 2026 revenue rose, but weaker profit margins and a cautious outlook triggered a sharp reassessment.

On June 23, Sunbelt reported record total revenue of $11.154 billion, but net income fell 14.7% and its adjusted EBITDA margin declined to 41.9% from 44.0%. Fiscal 2027 adjusted EBITDA guidance of $4.85 billion-$5.05 billion implied only moderate growth. Investing.com reported the shares fell about 8.7% that day as investors focused on margin pressure and the outlook. That attribution is plausible rather than certain because the company also announced the Reliant acquisition in the same release.

Reliant expands SpecialtyThe $650 million Reliant deal adds modular space growth, but it also commits more capital.

Sunbelt disclosed on June 23 that it had completed the $650 million purchase of Reliant Asset Management on May 1. Reliant adds modular-space rentals to Specialty, the company's faster-growing North American segment, and management expects the acquisition to increase earnings per share in its first year while keeping debt within its target range. The deal strengthens the growth case, but its separate stock-price effect cannot be isolated because it was announced alongside the fiscal-year results and outlook.

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Financial statements

	2026	2025	2024	2023
Revenue	$2.51B	$2.40B	$2.80B	$9.67B
Gross profit	$4.29B	$4.32B	$4.48B	$8.12B
Gross margin	170.98%	179.70%	160.01%	83.95%
Operating expenses	$2.11B	$1.82B	$1.97B	$5.59B
Operating income	$2.18B	$2.50B	$2.51B	$2.52B
Operating margin	86.93%	103.95%	89.74%	26.09%
EBITDA	$4.49B	$4.75B	$4.56B	$4.41B
EBITDA margin	178.96%	197.59%	162.90%	45.59%
Net income	$1.32B	$1.55B	$1.57B	$1.62B
Net profit margin	52.81%	64.60%	56.18%	16.73%
Basic EPSper basic share	$3.15	$3.56	$3.60	$3.68
Diluted EPSper diluted share	$3.15	$3.55	$3.58	$3.66

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Sunbelt Rentals Holdings, Inc. (SUNB)

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