H&E Equipment Services (HEES) AI Stock Analysis

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H&E Equipment Services

(NASDAQ:HEES)

Rating:56Neutral

Price Target:―

H&E Equipment Services' overall stock score is supported by strong revenue growth and a strategic merger with Herc Holdings, promising future synergies. However, technical indicators suggest short-term bearishness, and the high P/E ratio indicates overvaluation, which are potential risks.

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. SPDR S&P 500 ETF (SPY)

Market Cap

$3.47B

Dividend Yield1.16%

Average Volume (3M)634.59K

Price to Earnings (P/E)38.0

Beta (1Y)1.52

Revenue Growth-3.52%

EPS Growth-46.60%

CountryUS

Employees2,800

SectorIndustrials

Sector Strength85

IndustryRental & Leasing Services

Share Statistics

EPS (TTM)-0.17

Shares Outstanding36,667,000

10 Day Avg. Volume467,636

30 Day Avg. Volume634,586

Financial Highlights & Ratios

PEG Ratio-1.38

Price to Book (P/B)5.44

Price to Sales (P/S)0.00

P/FCF Ratio29.66

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$92.00

Price Target Upside-2.79% Downside

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, specializing in the rental, sales, and service of a comprehensive range of construction and industrial equipment. The company operates in various sectors including construction, energy, and infrastructure, providing a wide array of heavy machinery and equipment solutions to meet the diverse needs of its clients. HEES is known for its extensive inventory, industry expertise, and commitment to customer service.

How the Company Makes MoneyH&E Equipment Services generates revenue primarily through three main channels: equipment rentals, sales of new and used equipment, and repair and maintenance services. Equipment rentals form a significant portion of the company's income, capitalizing on the demand for temporary access to high-quality machinery without the commitment of purchase. Additionally, HEES sells both new and used construction and industrial equipment, leveraging its extensive supplier relationships and inventory. The company also earns revenue from maintenance and repair services, providing ongoing support and ensuring the longevity and performance of the equipment they rent or sell. These services are often complemented by parts sales, contributing to a stable and recurring revenue stream. Strategic partnerships with equipment manufacturers and suppliers, along with a strong market presence, further bolster HEES's earning capacity.

H&E Equipment Services Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q3-2024)

% Change Since: 4.71%|

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 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

Positive

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

Neutral

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

Neutral

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.46B	1.52B	1.47B	1.24B	1.06B	1.17B
	Gross Profit
619.60M	675.20M	684.46M	555.16M	415.36M	402.62M
	EBIT
180.08M	229.31M	276.70M	-83.04M	-134.53M	-150.75M
	EBITDA
625.65M	219.65M	672.50M	550.27M	407.66M	273.62M
	Net Income Common Stockholders
90.89M	122.98M	169.29M	132.17M	60.56M	-32.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.32M	16.41M	8.50M	81.33M	357.30M	310.88M
	Total Assets
2.68B	2.96B	2.64B	2.29B	2.08B	1.98B
	Total Debt
0.00	243.65M	1.61B	1.41B	1.42B	1.41B
	Net Debt
1.59B	227.24M	1.60B	1.33B	1.06B	1.10B
	Total Liabilities
2.07B	2.17B	2.11B	1.89B	1.78B	1.74B
	Stockholders Equity
603.88M	785.66M	534.29M	401.04M	303.38M	238.23M
Cash Flow		Free Cash Flow
111.75M	44.34M	-340.35M	-202.65M	-193.13M	150.99M
	Operating Cash Flow
509.36M	498.31M	405.48M	313.24M	259.57M	286.02M
	Investing Cash Flow
-320.33M	-459.04M	-608.76M	-546.54M	-170.97M	21.09M
	Financing Cash Flow
-188.77M	-28.65M	130.45M	-42.67M	-42.18M	-10.47M

H&E Equipment Services Technical Analysis

Technical Analysis Sentiment

Positive

Last Price94.64

Price Trends

50DMA

93.04

Positive

100DMA

91.51

Positive

200DMA

71.36

Positive

Market Momentum

MACD

0.69

Positive

RSI

55.51

Neutral

STOCH

30.04

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 94.64 is above the 20-day moving average (MA) of 94.61, above the 50-day MA of 93.04, and above the 200-day MA of 71.36, indicating a bullish trend. The MACD of 0.69 indicates Positive momentum. The RSI at 55.51 is Neutral, neither overbought nor oversold. The STOCH value of 30.04 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 (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGRC	78 Outperform	$2.77B	11.65	22.80%	1.73%	7.31%	91.99%
HRI	66 Neutral	$3.75B	25.16	9.60%	2.48%	8.34%	-63.02%
Sector *	66 Neutral	$4.49B	12.22	5.40%	3.71%	4.17%	-11.97%
WSC	59 Neutral	$4.83B	293.78	1.28%	1.06%	-0.77%	-94.12%
HEES	56 Neutral	$3.47B	38.00	15.74%	1.16%	-3.52%	-46.60%
VSTS	55 Neutral	$766.98M	122.82	-2.73%	2.40%	-4.11%	-115.02%
PONY	45 Neutral	$4.36B	―	-33.58%	―	4.27%	-120.11%

* Industrials Sector Average

Performance Comparison

HEES

H&E Equipment Services

94.64

51.52

119.48%

WSC

WillScot Mobile Mini Holdings

26.13

-12.85

-32.97%

HRI

Herc Holdings

111.41

-20.11

-15.29%

MGRC

Mcgrath Rentcorp

112.52

8.06

7.72%

VSTS

Vestis Corporation

5.79

-5.96

-50.72%

PONY

Pony AI Inc. Sponsored ADR

12.36

-0.66

-5.07%

H&E Equipment Services Corporate Events

Delistings and Listing ChangesM&A Transactions

H&E Equipment Services Acquired by Herc Holdings

Neutral

Jun 2, 2025

On June 2, 2025, H&E Equipment Services, Inc. terminated its Sixth Amended and Restated Credit Agreement and completed the redemption of its 3.875% Senior Notes due 2028, in connection with its acquisition by Herc Holdings Inc. The acquisition, finalized on June 2, 2025, resulted in H&E becoming a wholly owned subsidiary of Herc, with all outstanding shares being converted into cash and stock, leading to the delisting of H&E’s shares from Nasdaq and the termination of its registration under the Securities Exchange Act.

The most recent analyst rating on (HEES) stock is a Buy with a $62.00 price target. To see the full list of analyst forecasts on H&E Equipment Services stock, see the HEES Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.