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Herc Holdings (HRI)
NYSE:HRI
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Herc Holdings
(NYSE:HRI)
61Neutral
Positive Factors
Acquisition benefits
The pending acquisition of H&E presents attractive upside despite an uncertain near-term macro outlook.
Earnings potential
Herc's ability to capture deal synergies and realize outgrowth from solid mega project tailwinds provides a framework for a compelling earnings trajectory and margin expansion.
Negative Factors
Integration challenges
The integration will be a substantial undertaking, at a time when Herc’s execution on flow through has been mixed.
Leverage concerns
There are concerns about leverage post the H&E deal, although the potential to cut fleet capex and throw off more free cash flow could accelerate debt paydown.
Herc Holdings (HRI) vs. S&P 500 (SPY)
Market Cap
$3.27B
Dividend Yield2.57%
Average Volume (3M)602.42K
Price to Earnings (P/E)15.5
Beta (1Y)1.71
Revenue Growth8.34%
EPS Growth-63.02%
CountryUS
Employees7,600
SectorIndustrials
Sector Strength66
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)3.58
Shares Outstanding28,484,455
10 Day Avg. Volume600,810
30 Day Avg. Volume602,423
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.08
Price to Cash Flow (P/CF)2.90
P/FCF Ratio14.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$130.00Price Target Upside16.64% Upside
Rating ConsensusHold
Number of Analyst Covering6
Herc Holdings Business Overview & Revenue Model
Company DescriptionHerc Holdings Inc., through its subsidiaries, operates as an equipment rental supplier in the United States and internationally. It rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment. The company also provides ProSolutions, an industry specific solution-based services, which include power generation, climate control, remediation and restoration, pump, trench shoring, and studio and production equipment; and ProContractor professional grade tools. In addition, it offers various services, including repair, maintenance, equipment management, and safety training; and equipment re-rental and on-site support services, as well as ancillary services, such as equipment transport, rental protection, cleaning, refueling, and labor. Further, the company sells used equipment and contractor supplies, such as construction consumables, tools, small equipment, and safety supplies. It serves non-residential and residential construction, specialty trade, restoration, remediation and environment, and facility maintenance contractors; industrial manufacturing industries, including automotive and aerospace, power, metals and mining, agriculture, pulp, paper and wood, food and beverage, and refineries and petrochemical industries; infrastructure and government sectors; and commercial facilities, hospitality, healthcare, recreation, entertainment production, and special event management customers. The company sells its products through its sales team and industry catalogs, as well as through participation and sponsorship of industry events, trade shows, and Internet. Herc Holdings Inc. was founded in 1965 and is based in Bonita Springs, Florida.
How the Company Makes MoneyHerc Holdings generates revenue primarily through the rental and leasing of its diverse equipment fleet to a broad customer base across multiple industries. The company's key revenue streams include daily, weekly, and monthly rental agreements, which are structured to meet the short-term and long-term needs of its clients. Additionally, Herc Holdings earns income from ancillary services such as equipment maintenance, repair services, and the sale of used equipment. The company's strategic partnerships with equipment manufacturers and its expansive network of rental locations further bolster its earnings by ensuring a steady supply of high-demand machinery and enhancing customer accessibility.
Herc Holdings Financial Statement Overview
Summary
Herc Holdings demonstrates strong revenue growth and operational efficiency, with high gross and EBIT margins. However, a decline in net profit margin and return on equity suggests challenges in profitability and cost management. The reduction in leverage is positive, but liquidity risks from cash flow issues need addressing.Income Statement
Herc Holdings shows a solid revenue growth trend, with a 10.1% increase from 2023 to 2024. Gross profit margin stands robustly at 100%, indicating efficient cost management. However, the net profit margin has decreased to 5.9% in 2024 from 10.6% in 2023, suggesting higher operational costs or other expenses impacting profitability. The EBIT margin improved significantly to 86.6% in 2024, which shows enhanced operational efficiency, albeit with a reduced EBITDA margin of 14.5%.75
Positive
Balance Sheet
The company's debt-to-equity ratio decreased to 0.65 in 2024 from 3.5 in 2023, reflecting improved financial leverage and reduced risk. Return on equity dropped to 15.1% in 2024 from 27.3% in 2023, indicating a decline in profitability relative to shareholder's equity. The equity ratio improved to 17.7%, suggesting a stronger capital structure with a higher proportion of equity financing.65
Positive
Cash Flow
Herc Holdings exhibits a significant decline in cash flow performance, with no free cash flow in 2024 compared to the negative free cash flow of $-390 million in 2023. The operating cash flow to net income ratio cannot be computed for 2024 due to zero operating cash flow, indicating potential liquidity concerns. The company's cash flow metrics reflect challenges in converting profits into cash.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.37B | 3.28B | 2.74B | 2.07B | 1.78B | Gross Profit |
| 1.16B | 1.22B | 1.06B | 688.50M | 464.10M | EBIT |
| 0.00 | 663.00M | 558.90M | 379.90M | 202.80M | EBITDA |
| 1.36B | 1.43B | 1.19B | 865.40M | 654.60M | Net Income Common Stockholders |
| 211.00M | 347.00M | 330.00M | 224.00M | 73.70M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 83.00M | 71.00M | 53.50M | 35.10M | 33.00M | Total Assets |
| 7.88B | 7.06B | 5.96B | 4.49B | 3.59B | Total Debt |
| 902.00M | 4.48B | 3.62B | 2.47B | 2.05B | Net Debt |
| 819.00M | 4.41B | 3.56B | 2.43B | 2.02B | Total Liabilities |
| 6.48B | 5.79B | 4.85B | 3.51B | 2.85B | Stockholders Equity |
| 1.40B | 1.27B | 1.11B | 976.90M | 742.00M |
| Cash Flow | Free Cash Flow | |||
| 16.00M | -390.00M | -355.50M | 102.20M | 225.40M | Operating Cash Flow |
| 1.23B | 1.09B | 916.70M | 744.00M | 610.90M | Investing Cash Flow |
| -1.51B | -1.58B | -1.68B | -961.30M | -207.50M | Financing Cash Flow |
| 299.00M | 512.00M | 784.10M | 219.60M | -406.00M |
Herc Holdings Technical Analysis
Negative
111.45
Price Trends
137.24
Negative
169.71
Negative
167.01
Negative
Market Momentum
-8.76
Positive
40.39
Neutral
36.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRI, the sentiment is Negative. The current price of 111.45 is below the 20-day moving average (MA) of 121.89, below the 50-day MA of 137.24, and below the 200-day MA of 167.01, indicating a bearish trend. The MACD of -8.76 indicates Positive momentum. The RSI at 40.39 is Neutral, neither overbought nor oversold. The STOCH value of 36.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HRI.
Herc Holdings Risk Analysis
Herc Holdings disclosed 28 risk factors in its most recent earnings report. Herc Holdings 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
Herc Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $2.50B | 10.80 | 22.53% | 1.86% | 9.51% | 104.30% | |
70 Outperform | $888.13M | 8.76 | 19.70% | 0.53% | 28.48% | 150.59% | |
63 Neutral | $4.14B | 11.23 | 5.47% | 215.40% | 4.10% | -8.63% | |
61 Neutral | $3.27B | 15.53 | 9.60% | 2.57% | 8.34% | -63.02% | |
61 Neutral | $4.13B | 152.30 | 2.47% | 0.31% | 1.31% | -89.60% | |
58 Neutral | $3.27B | 26.51 | 21.26% | 1.23% | 3.22% | -27.67% | |
51 Neutral | $137.74M | ― | -54.64% | 5.35% | -0.01% | -1174.26% |
* Industrials Sector Average
Performance Comparison
HRI
Herc Holdings
111.45
-39.99
-26.41%
WSC
WillScot Mobile Mini Holdings
24.89
-12.98
-34.28%
HEES
H&E Equipment Services
90.30
32.86
57.21%
MGRC
Mcgrath Rentcorp
104.02
-3.42
-3.18%
WLFC
Willis Lease Finance
143.92
95.79
199.02%
ALTG
Alta Equipment Group
4.52
-6.56
-59.21%
Herc Holdings Earnings Call Summary
Earnings Call Date: Apr 22, 2025 | % Change Since: -0.04% | Next Earnings Date: Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While Herc Holdings demonstrated growth in equipment rental revenue and made strategic moves with the acquisition of H&E Equipment Services, challenges such as local market difficulties, weather disruptions, and margin pressures were significant. The company remains optimistic about its long-term strategy and growth opportunities, particularly in the specialty fleet and national accounts, but near-term pressures are notable.Highlights
Equipment Rental Revenue Growth
Equipment rental revenue increased by approximately 5% in the first quarter, driven by strong megaproject activity and the integration of 2024 acquisitions.
H&E Equipment Services Acquisition
Executed a merger agreement to acquire H&E Equipment Services and its 160 U.S. branch locations, expanding scale and geographic coverage. The integration is expected to create significant revenue synergies over a three-year period.
Safety and Operational Efficiency
Achieved 96% of days as perfect in safety measures across all operations. Total reportable incident rate remains below the industry's benchmark of 1.0.
Continued Investment in Specialty Fleet
Increased specialty fleet CapEx to support mega projects and cross-sell opportunities, with specialty fleet representing about 24% of the total fleet.
Lowlights
Challenging Local Market Conditions
Local market faced challenges due to elevated interest rates, leading to a slowdown in local project starts and affecting local account growth.
Weather-Related Disruptions
Unusually cold weather in late January and mid-February led to temporary branch closures in the southern states, impacting daily and weekly local rentals.
Higher Costs and Margin Pressure
Increased insurance expenses and inefficiencies from recent acquisitions and greenfields pressured margins, with a notable impact in the first quarter.
Net Loss Due to Transaction Costs
Recorded a net loss in the first quarter related to $74 million of H&E transaction costs.
Company Guidance
During Herc Holdings' Q1 2025 earnings call, the company reported a 5% growth in equipment rental revenue, excluding their Cinelease business, which is held for sale. They noted a significant focus on integrating their recent acquisition of H&E Equipment Services to expand their U.S. presence and enhance long-term opportunities. Herc's strategy involves leveraging their broad capabilities, including a diversified fleet mix and technology leadership, to manage market cycles and drive sustainable growth. The company also highlighted ongoing strength in national accounts driven by large construction projects, while acknowledging challenges in local markets due to high interest rates. Safety remained a priority, with operations achieving at least 96% of perfect days. The management reiterated their confidence in achieving revenue synergies from the H&E acquisition and maintaining a strong capital discipline to generate higher returns.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.