Investing.com -- S&P Global Ratings has upgraded the issuer credit rating for United Rentals Inc (NYSE: URI) to investment-grade status at 'BBB-' from 'BB+', citing the equipment rental giant’s disciplined financial policy, sustained cash flow generation, and reduced leverage. The rating agency also raised the issue-level rating on the company’s unsecured debt to 'BBB-' while affirming its 'BBB-' rating on senior debt, establishing a stable outlook that reflects expectations for steady operating metrics through market cycles.

The upgrade highlights United Rentals' ability to maintain leverage in the low-2x area while continuing to fund strategic growth and share repurchases. S&P Global Ratings emphasized that the company's scale and expanding specialty equipment footprint provide a critical buffer to absorb potential cyclical downturns in nonresidential construction.

A primary driver behind the higher rating is the company’s robust cash generation, marked by annual free operating cash flow exceeding $1.5 billion over the past five years. S&P expects United Rentals to generate revenue growth between 8% and 10% annually through 2027, propelled by sustained demand across U.S. mega-projects and data center construction.

Adjusted EBITDA margins are forecast to remain firm at 46% to 48%, supported by operating leverage and continuous fleet reinvestment, according to S&P. Analysts noted that the company retains significant operational flexibility to scale back capital expenditures during market drawdowns, which should help protect cash flow and keep debt-to-EBITDA below its 3x target threshold over the long term.

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