U-Haul's Valuation Dilemma: Overpriced or Undervalued Amid a Market Shift?

The debate over U-Haul Holding Company (UHAL)'s valuation has intensified as the self-storage and moving industries undergo structural shifts. With a trailing P/E ratio of 54.40 and a forward P/E of 103.09, U-Haul's stock appears stretched relative to its peers, yet analysts remain cautiously optimistic about its long-term potential. This article examines whether U-Haul's current valuation reflects genuine opportunity or risk by contrasting discounted cash flow (DCF) analysis with market sentiment and sector dynamics.

DCF Analysis: A Cautious Outlook

U-Haul's financials reveal a mixed picture. While the company reported $1.72 billion in Q3 2025 revenue-a 3.7% year-on-year increase-its GAAP earnings per share (EPS) of $0.49 fell 24.6% below estimates, driven by elevated depreciation expenses and losses on equipment sales. Adjusted EBITDA of $523.9 million (30.5% margin) suggests operational resilience, but margins have contracted from 18.4% in the same quarter of 2024 to 12.9% in 2025.

For DCF modeling, U-Haul's weighted average cost of capital (WACC) of 6.46% serves as the discount rate. Management projects depreciation expenses peaking in late 2025 and early 2026 before stabilizing at $700–$750 million annually. Assuming a 2.2% revenue growth rate (aligned with analyst projections) and a terminal growth rate of 2% as per Seeking Alpha, the intrinsic value calculation would heavily depend on the normalization of depreciation costs and the sustainability of self-storage growth. However, the self-storage segment, which contributed a 7.9% revenue increase in Q3 2025, faces headwinds: same-store occupancy dropped to 92.4%, signaling potential saturation.

Market Sentiment: Optimism Amid Volatility

Despite earnings misses, U-Haul's stock has attracted a "Moderate Buy" consensus rating, with an average 12-month price target of $80.00-implying a 53% upside from its current price of $52.27. Analysts highlight the company's strategic investments in dealer network expansion (surpassing 25,000 locations) and the U-Box program, which is growing faster than its core moving equipment business. These initiatives align with the broader shift toward portable storage solutions, a trend that could drive long-term value.

However, U-Haul's valuation multiples remain elevated compared to peers. For instance, Ryder System, a larger player in the rental and leasing industry, trades at a lower P/E ratio due to its mature business model. U-Haul's Price/Sales ratio of 1.79 and Price/Book ratio of 1.33 suggest investors are paying a premium for growth potential, particularly in self-storage. Yet, this optimism clashes with recent operational challenges: a $38 million loss on equipment disposal in Q2 2026 and a 5-year low in EBITDA growth (−17.5% in March 2024) underscore the risks of over-reliance on fleet reinvestment.

Contrasting Fundamentals and Sentiment

The disconnect between U-Haul's DCF-derived intrinsic value and its market price hinges on two factors: growth expectations and sector positioning. On one hand, the company's $1.295 billion fleet reinvestment budget for FY2026 and expansion into 6.5 million net rentable square feet of self-storage signal aggressive growth. On the other, the drag from depreciation and the competitive landscape-where U-Haul holds only 9.59% of the Rental & Leasing industry's 12-month trailing revenue-raises questions about scalability.

Analysts' price targets ($80–$98) assume a successful transition to a self-storage-driven model, but this hinges on maintaining occupancy rates and managing fleet costs. If depreciation normalizes and U-Box adoption accelerates, U-Haul could justify its premium valuation. Conversely, if self-storage growth plateaus or fleet overhang persists, the current P/E multiple may prove unsustainable.

Conclusion: A Tenuous Balance

U-Haul's valuation dilemma reflects a broader tension between near-term challenges and long-term potential. While DCF analysis suggests caution-given the drag from depreciation and modest revenue growth-market sentiment remains bullish on the company's strategic pivot to self-storage and portable solutions. Investors must weigh whether the current price of $52.27 reflects a realistic assessment of U-Haul's ability to execute its growth plans or an overcorrection to its sector's tailwinds. For now, the stock appears to straddle the line between opportunity and risk, demanding close scrutiny of management's ability to navigate the transition.