H&E Equipment Services (HEES) AI Stock Analysis

• Market Cap: $3.31B
• Dividend Yield: 1.22%
• Average Volume (3M): 854.51K
• Price to Earnings (P/E): 26.8
• Beta (1Y): 1.71
• Revenue Growth: 3.22%
• EPS Growth: -27.67%
• Country: US
• Employees: 2,800
• Sector: Industrials
• Sector Strength: 64
• Industry: Rental & Leasing Services
• EPS (TTM): 3.37
• Shares Outstanding: 36,613,180
• 10 Day Avg. Volume: 1,002,915
• 30 Day Avg. Volume: 854,508
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.29
• Price to Cash Flow (P/CF): 6.70
• P/FCF Ratio: 7.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $92.00
• Price Target Upside: 1.88% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

H&E Equipment Services is benefiting from strong revenue growth and a strategic merger with Herc Holdings, which could significantly enhance its market position. However, high leverage, cash flow difficulties, and bearish technical indicators pose risks. While the merger offers promising potential, careful management of leverage and cash flow is essential for sustained growth.

Positive Factors

Acquisition

The acquisition by United Rentals provides more opportunities for growth in a slower market.

Strategic Positioning

H&E's evolution to a pure play rental firm and its positioning across local/national projects, including mega projects, have positively impacted its market stance.

Valuation

Despite being better aligned with peers, H&E is viewed as undervalued, maintaining a Buy recommendation.

Negative Factors

Market Competition

There is a modest downside for construction machinery OEMs due to United Rentals' more favorable pricing and different mix of suppliers.

Regulatory Risks

Key risks include potential new diligence surprises or financing issues, and regulatory review is a potential risk.

H&E Equipment Services Business Overview & Revenue Model

Company Description

H&E Equipment Services, Inc. operates as an integrated equipment services company. The company operates in five segments: Equipment Rentals, Used Equipment Sales, New Equipment Sales, Parts Sales, and Repair and Maintenance Services. The Equipment Rentals segment provides construction and industrial equipment for rent on a daily, weekly, and monthly basis through a fleet of approximately 42,725 pieces of equipment. The Used Equipment Sales segment sells used equipment through retail sales force primarily from its rental fleet, as well as inventoried equipment that are acquired through trade-ins from equipment customers. The New Equipment Sales segment sells new construction equipment through a professional in-house retail sales force. The Parts Sales segment sells parts for the equipment customers, as well as offers for its rental fleet. The Repair and Maintenance Services segment serves its rental fleet and equipment owned customers, as well as offers ongoing preventative maintenance services to industrial customers. It also provides ancillary equipment support activities, including transportation, hauling, parts shipping, and loss damage waivers. The company's rental fleet consists of hi-lift or aerial work platforms, cranes, earthmoving and material handling equipment, and others. It serves industrial and commercial companies, construction contractors, manufacturers, public utilities, municipalities, maintenance contractors, and various other industrial account customers. As of December 31, 2021, the company had a network of 102 service facilities in the Pacific Northwest, West Coast, Intermountain, Southwest, Gulf Coast, Southeast, and Mid-Atlantic regions of the United States. H&E Equipment Services, Inc. was founded in 1961 and is headquartered in Baton Rouge, Louisiana.

How the Company Makes Money

H&E Equipment Services generates revenue primarily through three key streams: equipment rentals, equipment sales, and parts and repair services. The rental segment is the most significant contributor, where the company rents out a broad range of heavy and specialized equipment on a short-term or long-term basis to businesses in construction, manufacturing, and other industries. Equipment sales involve selling new and used machinery to customers, providing them with the necessary tools for their operations. Additionally, HEES offers parts sales and repair services, ensuring that equipment remains operational and well-maintained. This service component not only supports customer retention by enhancing the longevity and reliability of their equipment but also contributes significantly to the company's revenue. Strategic partnerships with equipment manufacturers and a robust distribution network further bolster HEES's market presence and financial performance.

H&E Equipment Services Financial Statement Overview

Summary

H&E Equipment Services shows strong revenue growth and improving profitability, but faces challenges with high leverage and recent cash flow difficulties. Efforts to reduce debt and improve equity are positive, but cash flow management remains critical.

Income Statement

H&E Equipment Services has demonstrated strong revenue growth with an increasing trend from $1.24 billion in 2022 to $1.52 billion in 2024. The gross profit margin for 2024 is approximately 44.5%, indicating effective cost management. Although the net profit margin shows improvement, reaching around 10.7% in 2024, EBIT and EBITDA margins have seen fluctuations due to varying operational efficiencies over the years. Overall, the income statement indicates a positive growth trajectory and improving profitability.

Balance Sheet

The company's balance sheet reveals a significant reduction in total debt from 2023 to 2024, with a notable improvement in equity positioning. However, the absence of stockholders' equity data for 2024 impedes a complete analysis of leverage ratios. Historically, the debt-to-equity ratio has been high, suggesting potential risks related to financial leverage. Nonetheless, the company's efforts to reduce debt and increase equity are positive steps towards achieving balance sheet stability.

Cash Flow

Cash flow analysis shows a challenging scenario with negative free cash flow in recent years, particularly in 2023. The lack of operating and free cash flow data for 2024 limits a comprehensive assessment. Historically, the company has faced difficulties in converting operating profits into free cash flow, indicating potential challenges in operational efficiency or capital expenditure management. Improving cash flow management remains a critical focus area.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.52B	1.47B	1.24B	1.06B	1.17B
	Gross Profit
675.20M	684.46M	555.16M	415.36M	402.62M
	EBIT
219.65M	276.70M	-83.04M	-134.53M	-150.75M
	EBITDA
219.65M	672.50M	550.27M	407.66M	273.62M
	Net Income Common Stockholders
122.98M	169.29M	132.17M	60.56M	-32.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.41M	8.50M	81.33M	357.30M	310.88M
	Total Assets
2.96B	2.64B	2.29B	2.08B	1.98B
	Total Debt
243.65M	1.61B	1.41B	1.42B	1.41B
	Net Debt
227.24M	1.60B	1.33B	1.06B	1.10B
	Total Liabilities
2.17B	2.11B	1.89B	1.78B	1.74B
	Stockholders Equity
785.66M	534.29M	401.04M	303.38M	238.23M
Cash Flow		Free Cash Flow
44.34M	-340.35M	-202.65M	-193.13M	150.99M
	Operating Cash Flow
495.60M	405.48M	313.24M	259.57M	286.02M
	Investing Cash Flow
-459.04M	-608.76M	-546.54M	-170.97M	21.09M
	Financing Cash Flow
-28.65M	130.45M	-42.67M	-42.18M	-10.47M

H&E Equipment Services Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 90.30
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HEES, the sentiment is Neutral. The current price of 90.3 is below the 20-day moving average (MA) of 92.37, below the 50-day MA of 93.77, and above the 200-day MA of 65.00, indicating a neutral trend. The MACD of -0.92 indicates Positive momentum. The RSI at 41.83 is Neutral, neither overbought nor oversold. The STOCH value of 36.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HEES.

H&E Equipment Services Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGRC	71 Outperform	$2.50B	10.80	22.53%	1.85%	9.51%	104.30%
Sector *	63 Neutral	$4.26B	11.28	5.43%	215.24%	4.12%	-8.73%
WSC	61 Neutral	$4.55B	168.40	2.47%	0.30%	1.31%	-89.60%
HRI	61 Neutral	$3.27B	15.53	9.60%	2.57%	8.34%	-63.02%
HEES	58 Neutral	$3.31B	26.80	21.26%	1.22%	3.22%	-27.67%
VSTS	58 Neutral	$1.06B	111.07	1.06%	1.74%	―	―

H&E Equipment Services Corporate Events

H&E Equipment Services Merges with Herc Holdings

On February 19, 2025, H&E Equipment Services entered into a merger agreement with Herc Holdings, leading to the acquisition of H&E by Herc in a cash and stock transaction. This strategic move aims to enhance Herc’s growth strategy, creating the third-largest rental company in North America with significant synergies and improved financial profiles. The merger, expected to close mid-2025, will see H&E shareholders owning a significant portion of the combined entity, promising substantial benefits for stakeholders.

H&E Equipment Services Declares Quarterly Cash Dividend

On February 7, 2025, H&E Equipment Services announced a regular quarterly cash dividend of $0.275 per share, payable on February 24, 2025, to stockholders of record as of February 18, 2025. This decision reflects the company’s ongoing commitment to delivering value to its shareholders, potentially reinforcing its market position and financial stability.