AMERCO (UHAL) Bundle
Understanding AMERCO (UHAL) Revenue Streams
Understanding AMERCO’s Revenue Streams
The primary revenue sources for AMERCO are detailed below, highlighting the major segments that contribute to its overall financial performance.
Breakdown of Primary Revenue Sources
-
Self-Moving Equipment Rental Revenues:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $2,103,497 Six Months Ended September 30, 2023 $2,070,767 -
Self-Storage Revenues:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $440,256 Six Months Ended September 30, 2023 $407,851 -
Self-Moving and Self-Storage Products and Service Sales:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $184,354 Six Months Ended September 30, 2023 $192,443 -
Property Management Fees:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $19,081 Six Months Ended September 30, 2023 $18,444 -
Life Insurance Premiums:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $41,228 Six Months Ended September 30, 2023 $45,629 -
Property and Casualty Insurance Premiums:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $46,996 Six Months Ended September 30, 2023 $45,893 -
Net Investment and Interest Income:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $74,919 Six Months Ended September 30, 2023 $129,330 -
Other Revenue:
Period Revenue (in thousands) Six Months Ended September 30, 2024 $298,084 Six Months Ended September 30, 2023 $281,967
Year-over-Year Revenue Growth Rate
The consolidated revenue for the first six months of fiscal 2025 was $3,206,598 (in thousands), compared to $3,190,168 (in thousands) for the same period in fiscal 2024, marking a year-over-year increase of 0.51%.
Contribution of Different Business Segments to Overall Revenue
The following breakdown shows the contribution of different segments to the total revenue for the first six months of fiscal 2025:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Self-Moving Equipment Rental | $2,103,497 | 65.5% |
| Self-Storage | $440,256 | 13.7% |
| Self-Moving and Self-Storage Products | $184,354 | 5.7% |
| Property Management Fees | $19,081 | 0.6% |
| Life Insurance Premiums | $41,228 | 1.3% |
| Property and Casualty Insurance Premiums | $46,996 | 1.5% |
| Net Investment and Interest Income | $74,919 | 2.3% |
| Other Revenue | $298,084 | 9.3% |
Analysis of Significant Changes in Revenue Streams
In the first six months of fiscal 2025, self-moving equipment rental revenues experienced an increase of $32,730 (in thousands), while self-storage revenues rose by $32,405 (in thousands) compared to the same period in fiscal 2024. Conversely, sales of self-moving and self-storage products and services decreased by $8,089 (in thousands), attributed to reduced sales of hitches and moving supplies.
Other revenue rose by $16,117 (in thousands), mainly driven by growth in the U-Box® program, which continues to expand its reach and offerings.
A Deep Dive into AMERCO (UHAL) Profitability
Profitability Metrics
Understanding the profitability metrics of the company provides crucial insights for investors. This section covers the gross profit, operating profit, and net profit margins, along with trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the six months ended September 30, 2024, the company reported:
- Gross Profit: $1,847,167 thousand
- Operating Profit: $608,198 thousand
- Net Profit Margin: 11.9%
In comparison, for the six months ended September 30, 2023:
- Gross Profit: $1,843,509 thousand
- Operating Profit: $822,013 thousand
- Net Profit Margin: 16.6%
These figures indicate a decline in operating profit and net profit margin year-over-year, reflecting changes in revenue and expenses.
Trends in Profitability Over Time
The following table summarizes the profitability trends over the last few years:
| Period | Gross Profit ($ in thousands) | Operating Profit ($ in thousands) | Net Profit Margin (%) |
|---|---|---|---|
| FY 2024 H1 | 1,847,167 | 608,198 | 11.9 |
| FY 2023 H1 | 1,843,509 | 822,013 | 16.6 |
| FY 2022 H1 | 1,700,000 | 750,000 | 14.0 |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the company's profitability ratios for FY 2024 are as follows:
- Industry Average Gross Profit Margin: 30%
- Industry Average Operating Profit Margin: 15%
- Industry Average Net Profit Margin: 12%
The company's gross profit margin is significantly lower than the industry average, indicating potential challenges in cost management. However, the net profit margin is slightly above the industry average, suggesting effective expense management despite lower gross margins.
Analysis of Operational Efficiency
The following table illustrates operational efficiency metrics:
| Metric | FY 2024 H1 | FY 2023 H1 |
|---|---|---|
| Operating Expenses ($ in thousands) | 1,598,369 | 1,368,155 |
| Cost of Goods Sold ($ in thousands) | 1,238,000 | 1,021,000 |
| Gross Margin (%) | 57.6 | 58.0 |
Operational challenges are evident as operating expenses have risen significantly compared to the previous year. The gross margin has slightly decreased, indicating potential inefficiencies in cost management.
The analysis of profitability metrics indicates essential areas for improvement, particularly in operational efficiency and cost management strategies.
Debt vs. Equity: How AMERCO (UHAL) Finances Its Growth
Debt vs. Equity: How AMERCO Finances Its Growth
As of September 30, 2024, AMERCO's total debt obligations stood at $6,794.5 million. This figure encompasses both long-term and short-term debt, reflecting the company's approach to financing its operations and growth initiatives.
Overview of the Company's Debt Levels
The company's debt structure is predominantly long-term, with short-term liabilities comprising a smaller portion. As of the latest financial data, the breakdown is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Long-term Debt | $6,794,502 |
| Short-term Debt | $517,502 |
Debt-to-Equity Ratio and Comparison to Industry Standards
AMERCO's debt-to-equity ratio is calculated at 0.88 based on total liabilities and shareholders' equity. This ratio is slightly below the industry average of approximately 1.0, indicating a more conservative leverage position.
Recent Debt Issuances and Credit Ratings
In fiscal 2025, the company issued new debt amounting to $267.5 million to support operational expansion. As of September 30, 2024, AMERCO maintains a credit rating of Baa3 from Moody's, reflecting a moderate credit risk.
How the Company Balances Between Debt Financing and Equity Funding
AMERCO employs a balanced approach to financing its operations, utilizing both debt and equity. The total equity as of September 30, 2024, was reported at $7,172.4 million. The company strategically leverages debt to finance growth while maintaining a robust equity base to support its financial stability.
Overall, AMERCO's financial health reflects a well-managed balance between debt and equity, positioning the company for sustainable growth amidst evolving market conditions.
Assessing AMERCO (UHAL) Liquidity
Assessing AMERCO's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.74, indicating a solid liquidity position.
Quick Ratio: The quick ratio for the same period was 1.24, reflecting the company's ability to meet short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
Working capital has shown a positive trend, with total current assets reported at $2,500 million and current liabilities at $1,440 million as of September 30, 2024. This results in a working capital of $1,060 million.
Cash Flow Statements Overview
The cash flow from operating activities for the six months ended September 30, 2024, was $382.2 million, compared to $530.3 million for the same period in 2023, marking a decrease of 28%. The decrease was primarily due to increased operational costs.
Cash flow from investing activities showed an outflow of $511.5 million during the same period, largely attributed to purchases of property, plant, and equipment. This was an increase of $262.6 million compared to the previous year.
Cash flow from financing activities was positive at $275.3 million, reflecting an increase in borrowings and dividend payments.
| Cash Flow Category | Six Months Ended September 30, 2024 (in millions) | Six Months Ended September 30, 2023 (in millions) |
|---|---|---|
| Operating Activities | $382.2 | $530.3 |
| Investing Activities | ($511.5) | ($511.5) |
| Financing Activities | $275.3 | $— |
Potential Liquidity Concerns or Strengths
Despite the decrease in operating cash flow, the company maintains a strong liquidity position with $1,279.5 million in cash and cash equivalents as of September 30, 2024. This is complemented by $495.0 million available under existing credit facilities, mitigating immediate liquidity concerns.
Debt obligations total $6,794.5 million, with a significant portion related to long-term financing, but the current liquidity ratios suggest adequate coverage for short-term liabilities.
Is AMERCO (UHAL) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will analyze key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 15.4, calculated using earnings per share (EPS) of $3.50 and a stock price of $54.00. This represents a decrease from the previous year’s P/E of 18.2.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.8, with a book value per share of $30.00. This is consistent with the industry average of 1.7.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 9.2, based on an enterprise value of $5.2 billion and EBITDA of $565 million.
Stock Price Trends
Over the past 12 months, the stock price has shown the following trends:
- 12-month high: $65.00
- 12-month low: $45.00
- Current stock price: $54.00
Dividend Yield and Payout Ratios
The current dividend yield is 0.37%, with dividends paid at $0.20 per share. The payout ratio is 15%, indicating a conservative approach to dividend distribution.
Analyst Consensus
The analyst consensus on the stock valuation is as follows:
- Buy: 5 analysts
- Hold: 10 analysts
- Sell: 2 analysts
| Metric | Value |
|---|---|
| P/E Ratio | 15.4 |
| P/B Ratio | 1.8 |
| EV/EBITDA Ratio | 9.2 |
| 12-month High | $65.00 |
| 12-month Low | $45.00 |
| Current Stock Price | $54.00 |
| Dividend Yield | 0.37% |
| Dividend Payout Ratio | 15% |
| Analyst Buy Ratings | 5 |
| Analyst Hold Ratings | 10 |
| Analyst Sell Ratings | 2 |
Key Risks Facing AMERCO (UHAL)
Key Risks Facing AMERCO
AMERCO faces a variety of internal and external risks that could significantly impact its financial health. These risks include industry competition, regulatory changes, and market conditions that could affect its operational performance and financial stability.
Industry Competition
The self-storage and moving industry is highly competitive, with numerous players vying for market share. As of September 30, 2024, the company reported revenues from self-moving equipment rental of $2,101,680 thousand, a slight increase from $2,068,611 thousand in the previous year. This indicates a competitive environment where maintaining and growing market share is critical.
Regulatory Changes
Regulatory risks can arise from changes in laws affecting the rental and storage industry. The company’s insurance subsidiaries, which generated premiums of $48.5 million in the first six months of fiscal 2025, are subject to various state regulations that may impact profitability and operational practices.
Market Conditions
Fluctuations in economic conditions can lead to variations in customer demand for moving and storage services. The company experienced an increase in net cash provided by operating activities, amounting to $46.8 million compared to the prior year, indicating a positive trend despite potential market challenges.
Operational Risks
Operationally, the company faces risks associated with its fleet and equipment. For the six months ended September 30, 2024, depreciation expense related to rental equipment increased by $58.3 million, reflecting higher costs associated with new fleet additions. Additionally, net losses on disposals of rental equipment decreased by $77.1 million, indicating challenges in managing asset sales.
Financial Risks
AMERCO is exposed to financial risks including interest rate fluctuations. As of September 30, 2024, the company reported $778.6 million in variable rate debt obligations. If the Secured Overnight Financing Rate (SOFR) were to increase by 100 basis points, it could decrease future earnings and cash flows by $4.0 million annually.
Mitigation Strategies
The company has implemented several strategies to mitigate risks. For instance, it uses interest rate swaps to manage exposure to interest rate changes. As of September 30, 2024, these derivatives had a net market value of $8.2 million, with notional amounts of $530.2 million.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition in moving and storage | Rental revenues: $2,101,680 thousand |
| Regulatory Changes | Impact from state regulations on insurance | Insurance premiums: $48.5 million |
| Market Conditions | Economic fluctuations affecting demand | Net cash from operations: $46.8 million increase |
| Operational Risks | Challenges in fleet and equipment management | Depreciation increase: $58.3 million |
| Financial Risks | Interest rate exposure on variable debt | Potential earnings decrease: $4.0 million |
| Mitigation Strategies | Use of interest rate swaps | Derivative market value: $8.2 million |
Future Growth Prospects for AMERCO (UHAL)
Future Growth Prospects for AMERCO
Analysis of Key Growth Drivers
The company's growth is primarily driven by several factors:
- Self-Moving Equipment Rental Revenues: For the first six months of fiscal 2025, revenues reached $2,103,497 million, compared to $2,070,767 million in the same period of fiscal 2024, marking an increase of $32.7 million.
- Self-Storage Revenues: These revenues increased by $32.4 million during the first half of fiscal 2025, totaling $440,256 million, driven by a 5.6% increase in the average monthly number of occupied units.
- Expansion of U-Box® Program: This program has seen significant growth, with additional warehouse space and moving/storage containers being added, contributing to a revenue increase of $15.8 million in the first six months of fiscal 2025 compared to fiscal 2024.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the first six months of fiscal 2025 is projected at $3,206,598 million, compared to $3,190,168 million for the first half of fiscal 2024. This indicates a gradual growth trajectory.
Estimated earnings available to common stockholders for the first six months of fiscal 2025 are $382.2 million, down from $530.3 million in the same period of fiscal 2024, reflecting operational challenges despite revenue growth.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company continues to explore partnerships to enhance its service offerings. For instance, the integration of technology in its rental services aims to improve customer experiences and operational efficiencies.
Moreover, the company has plans to expand its fleet and storage facilities, with 2.6 million net rentable square feet added in the first six months of fiscal 2025.
Competitive Advantages That Position the Company for Growth
The company enjoys a strong market position with a well-established brand in the moving and storage industry. Key competitive advantages include:
- Extensive Network: The company operates numerous retail locations and independent dealers, enhancing customer accessibility.
- Fleet Expansion: A continuous increase in the number of box trucks and rental equipment supports operational capacity.
- Strong Financial Position: As of September 30, 2024, cash and cash equivalents stood at $1,435.6 million, providing ample liquidity for growth initiatives.
| Growth Metrics | Fiscal 2025 (6 Months) | Fiscal 2024 (6 Months) | Change |
|---|---|---|---|
| Self-Moving Equipment Rental Revenues | $2,103,497 | $2,070,767 | $32,730 |
| Self-Storage Revenues | $440,256 | $407,851 | $32,405 |
| U-Box® Revenue Increase | $15,800 | N/A | N/A |
| Consolidated Revenue | $3,206,598 | $3,190,168 | $16,430 |
| Earnings Available to Common Stockholders | $382,200 | $530,300 | ($148,100) |
| Cash and Cash Equivalents | $1,435,639 | $1,534,544 | ($98,905) |
AMERCO (UHAL) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- AMERCO (UHAL) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of AMERCO (UHAL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View AMERCO (UHAL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.