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Herc Holdings Inc HRI

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Stock XNYS Rating as of
$155.83 +0.23 (0.15%)
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As of Cboe BZX Real-Time Price Open
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Company Report

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Herc Rentals Earnings: Solid Demand Leads to a Good Start in 2024; Shares Slightly Undervalued

Dawit Woldemariam

Herc reported solid performance in the first quarter. The market reacted positively by sending Herc’s shares up nearly 3.5% in intraday trading. Following the earnings update, we raised our fair value estimate by 5% to $166 per share, up from $158. Based on our cash flow projections, we think Herc’s shares are 8% undervalued. We have become more optimistic about the company’s prospects over the past couple of quarters. Demand has moderated from high levels but remains positive.

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Price vs Fair Value

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HRI is trading at a 114% premium.
Price
$155.72
Fair Value
$252.00
Uncertainty
High
1-Star Price
$659.20
5-Star Price
$14.30
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Increased equipment rental penetration in North America could result in more general equipment rentals, driving higher sales growth for Herc.

Bears

Rental customers may elect to buy equipment outright instead of renting, which could lead to a decline in the rental penetration rate, ultimately meaning lower sales for Herc.

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Trading Information

Previous Close Price
$155.60
Day Range
$155.14–156.06
52-Week Range
$99.91–171.00
Bid/Ask
$155.73 / $156.56
Market Cap
$4.43 Bil
Volume/Avg
16,055 / 214,467

Key Statistics

Price/Earnings (Normalized)
16.03
Price/Sales
1.33
Dividend Yield (Trailing)
1.65%
Dividend Yield (Forward)
1.71%
Total Yield
3.37%

Company Profile

Herc Holdings is an equipment rental company that was spun out of Hertz Global in 2016. It is currently the third-largest equipment rental company (4% market share) in North America, after United Rentals and Sunbelt Rentals, with a fleet size of $6.4 billion. It serves commercial and residential construction customers, the environmental sector, industrial entities, and entertainment production companies. During much of its 50-year-plus history, the company has rented equipment such as aerial lifts to its customers for intermittent use. More recently, it has broadened its catalog to include a host of specialty items. Separately, Herc Holdings’ strategy now incorporates long-term rentals to industrial customers where Herc maintains its own staff at the customer site.
Sector
Industrials
Industry
Rental & Leasing Services
Stock Style Box
Small Core
Total Number of Employees
7,200
Website
https://www.hercrentals.com

Competitors

Valuation

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Metric
HRI
AHT
URI
Price/Earnings (Normalized)
 16.0322.1216.32
Price/Book Value
 3.384.825.64
Price/Sales
 1.333.103.22
Price/Cash Flow
 3.6969.9910.23
Price/Earnings
HRI
AHT
URI

Financial Strength

Metric
HRI
AHT
URI
Quick Ratio
 1.251.240.71
Current Ratio
 1.441.360.81
Interest Coverage
 3.005.296.06
Quick Ratio
HRI
AHT
URI

Profitability

Metric
HRI
AHT
URI
Return on Assets (Normalized)
 5.13%8.59%7.81%
Return on Equity (Normalized)
 29.32%26.92%25.96%
Return on Invested Capital (Normalized)
 9.55%12.90%12.11%
Return on Assets
HRI
AHT
URI
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