U-Haul swings to $37M loss on fleet depreciation, poor resale market

U-Haul Holding Company swung to a loss in its fiscal third quarter, dragged down by increased fleet depreciation costs and a deteriorating resale market for aging equipment, sending shares lower in after-hours trading.

The Reno, Nevada-based moving and storage company reported a net loss of $37 million, reversing a $67.2 million profit in the same period a year earlier. Earnings per share landed at negative $0.18, missing analyst estimates of $0.14 by a wide margin—a $0.32 per-share shortfall that underscores the severity of the deterioration.

The company's nine-month earnings picture has turned similarly grim, with profits down 53% to $210.9 million compared to the prior year period, reflecting what executives described as challenging conditions in the equipment resale market.

U-Haul's core business model relies heavily on the lifecycle management of its extensive truck and trailer fleet, which the company continuously refreshes with newer vehicles while selling older units. The value of those used equipment sales has historically provided a significant earnings cushion, but that dynamic has shifted dramatically in recent quarters.

"We were having to pay too much for trucks," Chairman Edward Shoen told analysts, highlighting the squeeze the company faces on both the acquisition and disposal sides of its fleet management operations. The declining resale values mean U-Haul recovers less capital when retiring older vehicles, directly impacting the bottom line.

The company's market capitalization stands at approximately $10.7 billion, with shares trading at $59.04—down about 3% on the earnings news. Despite the quarterly stumble, U-Haul's stock remains near its 52-week high of $75.19, well above the low of $48.48 touched during the past year. The 50-day moving average sits at $53.44, suggesting the stock had been in an uptrend prior to the earnings disappointment.

Analysts have assigned a target price of $80.45 on the shares, though the earnings miss could prompt revisions to those forecasts. Currently, there is a single analyst rating on the stock—a hold position—with no buy or sell recommendations, reflecting limited institutional coverage despite the company's substantial market presence.

U-Haul's valuation metrics appear stretched in light of the earnings decline. The stock trades at 57.1 times trailing earnings and an even more aggressive 107.5 times forward earnings, suggesting investors had been pricing in significant earnings growth that now looks questionable given the current operating environment. The price-to-sales ratio stands at 1.8 times revenue.

The company's profit margin has compressed to 3.9%, while operating margins remain healthier at 12.9%, indicating the core rental business continues to generate solid returns before accounting for equipment depreciation and disposition losses. Return on equity sits at just 3.1%, reflecting the capital-intensive nature of the fleet-based business model.

Looking ahead, management indicated that original equipment manufacturer pricing for internal combustion engine trucks and the resale market could begin improving, potentially providing relief in future quarters. However, the timing and magnitude of any recovery remain uncertain, making it difficult for analysts to model near-term earnings with confidence.

The company's heavy insider ownership—60.4% of shares are held by insiders—means the Shoen family, which controls U-Haul through its ownership of non-voting and voting shares, bears the brunt of the earnings deterioration. This concentrated ownership structure typically means management's interests align closely with shareholders, but it also means limited outside pressure for strategic changes.

Institutional investors hold 38.9% of outstanding shares, providing some counterbalance to insider control. The relatively small free float of approximately 107.8 million shares can contribute to volatility when significant news hits, as evidenced by the after-hours share price decline.

U-Haul's challenges reflect broader pressures in the commercial vehicle market, where used equipment prices have softened following a period of elevated values during the pandemic recovery. The moving industry also faces potential headwinds from rising interest rates, which can dampen housing turnover—a key driver of moving demand.

With a fiscal year ending in March, investors will be watching the fourth quarter results closely for signs of stabilization in equipment resale values and any indication that fleet depreciation expenses are beginning to level off. Until those metrics show improvement, the company's earnings trajectory is likely to remain constrained by the very asset management strategy that has historically provided competitive advantages.