United Rentals inventory plunges on earnings however the macro indications are good

United Rentals shares are down 7.7% after hours and normally that’s a terrible sign for the real economy but I’d argue against that take today.

Shares have plunged to $925 from $990 at the close at $1008 earlier today. Part of the drop is because some major expectations have been building as shares ripped to $1000 from $525 at the April lows.

With a chart like this, any kind of miss was going to be punished.

The miss in this case was on margins as the company cited an inflationary environment and rising costs. That led to adusted EPS of $11.70 compared to $12.30 expected.

The cost side could be an issue for companies more broadly but it doesn’t appear that demand is waning, which is a good sign. The company beat on revenues ($4.23B vs $4.16B exp) and boosted its full-year forecast to $16.0-16.2 billion from $15.8-$16.1 billion.

The contrasted with a diminished free cash flow forecast at $2.1-2.3 billion vs $2.4-$2.6 billion previously.

The company didn’t offer much in terms of macro hints in the release except this from Matthew Flannery, chief executive officer:

“Looking
ahead, we are encouraged by the growth opportunities our customers see
on the horizon, particularly within large projects and across key
verticals”

The conference call is Thursday at 8:30 am ET.