Education
About Us
Working with TipRanks
Follow Us
H&E Equipment Services (HEES)
NASDAQ:HEES
Top Page
H&E Equipment Services
(NASDAQ:HEES)
56Neutral
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 (HEES) vs. S&P 500 (SPY)
Market Cap
$3.33B
Dividend Yield1.21%
Average Volume (3M)757.73K
Price to Earnings (P/E)36.4
Beta (1Y)1.61
Revenue Growth-3.52%
EPS Growth-46.60%
CountryUS
Employees2,800
SectorIndustrials
Sector Strength78
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)2.49
Shares Outstanding36,666,584
10 Day Avg. Volume610,064
30 Day Avg. Volume757,727
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.52
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit7.47
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.00Price Target Upside1.41% Upside
Rating ConsensusHold
Number of Analyst Covering0
H&E Equipment Services Business Overview & Revenue Model
Company DescriptionH&E Equipment Services (HEES) is a leading integrated equipment services company in the United States, focusing on the rental, sales, and support of industrial and construction equipment. Operating across various sectors such as construction, energy, industrial, and manufacturing, HEES provides a comprehensive range of heavy equipment including aerial work platforms, earthmoving machinery, material handling units, and other specialized equipment. The company is renowned for its extensive inventory and commitment to providing high-quality equipment and exceptional service to meet the diverse needs of its clientele.
How the Company Makes MoneyH&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 robust revenue growth and improving profitability in its income statement. However, the balance sheet reveals high historical leverage despite recent improvements, and cash flow analysis highlights challenges with negative free cash flow in past years. Addressing cash flow and maintaining balance sheet stability are crucial for long-term health.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.60
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 |
| 229.31M | 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 |
| 498.31M | 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
Positive
90.72
Price Trends
93.32
Negative
82.11
Positive
66.30
Positive
Market Momentum
-0.80
Negative
46.87
Neutral
66.77
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HEES, the sentiment is Positive. The current price of 90.72 is below the 20-day moving average (MA) of 90.83, below the 50-day MA of 93.32, and above the 200-day MA of 66.30, indicating a neutral trend. The MACD of -0.80 indicates Negative momentum. The RSI at 46.87 is Neutral, neither overbought nor oversold. The STOCH value of 66.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HEES.
H&E Equipment Services Risk Analysis
H&E Equipment Services disclosed 52 risk factors in its most recent earnings report. H&E Equipment Services reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
H&E Equipment Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.70B | 11.36 | 22.80% | 1.74% | 7.31% | 91.99% | |
64 Neutral | $4.27B | 11.81 | 5.31% | 249.66% | 4.08% | -8.61% | |
61 Neutral | $3.27B | 15.53 | 9.60% | 2.32% | 8.34% | -63.02% | |
60 Neutral | $4.98B | 303.00 | 1.28% | 0.26% | -0.77% | -94.12% | |
58 Neutral | $1.18B | 124.20 | 1.06% | 1.56% | ― | ― | |
56 Neutral | $3.33B | 36.43 | 15.74% | 1.21% | -3.52% | -46.60% | |
34 Underperform | $3.64B | ― | -33.58% | ― | 4.27% | -120.11% |
* Industrials Sector Average
Performance Comparison
HEES
H&E Equipment Services
90.72
43.04
90.27%
WSC
WillScot Mobile Mini Holdings
27.04
-11.17
-29.23%
HRI
Herc Holdings
116.20
-29.28
-20.13%
MGRC
Mcgrath Rentcorp
109.62
1.54
1.42%
VSTS
Vestis Corporation
8.98
-0.83
-8.46%
PONY
Pony AI Inc. Sponsored ADR
10.40
-2.62
-20.12%
H&E Equipment Services Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q3-2024)
| % Change Since: 0.38%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in branch expansion and active participation in mega projects, which are promising for future growth. However, these were offset by declines in total revenues, lower physical utilization, and increased expenses, leading to reduced net income and EBITDA. The outlook for 2025 appears optimistic, but current challenges remain.Q3-2024 Updates
Positive Updates
Branch Expansion Achievements
A record number of 8 branches were added in the third quarter, with a ninth branch opened in October. This expansion exceeded the company's expectations, growing their presence to 157 locations across 32 states, representing a 14% increase since the end of 2023 and approximately 54% since the end of 2021.
Mega Project Opportunities
H&E Equipment is actively participating in mega projects, with projects valued at $537 billion within their operational regions. The company is deployed on nearly half of these projects, which include data centers, solar and wind farms, and LNG export facilities.
Equipment Rental Revenue Growth
Total equipment rental revenues improved by 3.3% in the quarter, with a 9.2% increase on a trailing 12-month basis compared to the same period in 2023.
Strong Rental Equipment Margins
Margins on the sales of rental equipment exceeded 60% in the quarter, indicating strong profitability from equipment sales.
Negative Updates
Decline in Total Revenues
Total revenues declined by 4% from the year-ago quarter, primarily due to a more than 47% reduction in sales of rental equipment.
Lower Physical Utilization and Rental Rates
Physical utilization declined 240 basis points to 67.6%, and rental rates showed a slight decline of 0.1% year-over-year due to shifts towards mega projects.
Increased SG&A Expenses
SG&A expenses increased by 7.9% to $112.4 million, primarily due to branch expansion initiatives. This led to an increase in SG&A as a percentage of revenues from 26% to 29.2%.
Lower Net Income and EBITDA
Net income declined to $31.1 million from $48.9 million in Q3 2023, and adjusted EBITDA decreased by 8.4% to $175.3 million.
Company Guidance
In the third quarter of 2024, H&E Rentals reported mixed financial results, with total revenues declining by 4% year-over-year, primarily due to a 47% drop in rental equipment sales. Despite these challenges, equipment rental revenues rose by 3.3%, facilitated by the addition of 27 new locations, although physical utilization fell by 240 basis points to 67.6%. The company's fleet size, measured by original equipment cost, increased by 8.1%, reaching nearly $3 billion. Gross margins on rental equipment sales remained robust, exceeding 60%, although overall gross margins dipped to 44.5% from 47% a year earlier. The adjusted EBITDA margin declined to 45.6%. H&E's expansion efforts included the opening of 16 new branches in 2024, contributing to a 54% increase in branch count since 2021. The company remains optimistic about 2025, supported by positive indicators like the Dodge Momentum Index, while maintaining disciplined capital expenditure and rental rate strategies amidst a mixed non-residential construction spending environment.H&E Equipment Services Corporate Events
M&A TransactionsBusiness Operations and Strategy
H&E Equipment Services Merges with Herc Holdings
Positive
Feb 19, 2025
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.
Dividends
H&E Equipment Services Declares Quarterly Cash Dividend
Positive
Feb 7, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.