United Rentals: Overvalued Even With A Tax Law Windfall (Rating Downgrade)

United Rentals has surged over 60% since April, driven by strong results and a significant tax law windfall boosting free cash flow. Despite robust fundamentals, margins are compressing due to normalization in used equipment prices and slowing construction activity. The recent rally is almost entirely attributable to the new tax law, which adds $80-100 per share in value, but shares now trade at a high premium.