Analyzing Herc (HRI) and H&E Equipment Services (HEES)

Herc (NYSE: HRI) and H&E Equipment Services (NASDAQ:HEES) are both small-cap transportation companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, earnings, profitability, risk, analyst recommendations and dividends.

Institutional & Insider Ownership

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96.4% of Herc shares are owned by institutional investors. Comparatively, 75.9% of H&E Equipment Services shares are owned by institutional investors. 0.5% of Herc shares are owned by insiders. Comparatively, 11.7% of H&E Equipment Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.



Earnings and Valuation

This table compares Herc and H&E Equipment Services’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Herc $1.75 billion 1.04 $160.30 million ($0.32) -201.34
H&E Equipment Services $1.03 billion 1.39 $109.65 million $3.48 11.52

Herc has higher revenue and earnings than H&E Equipment Services. Herc is trading at a lower price-to-earnings ratio than H&E Equipment Services, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Herc has a beta of 2.34, suggesting that its stock price is 134% more volatile than the S&P 500. Comparatively, H&E Equipment Services has a beta of 2.47, suggesting that its stock price is 147% more volatile than the S&P 500.

Dividends

H&E Equipment Services pays an annual dividend of $1.10 per share and has a dividend yield of 2.7%. Herc does not pay a dividend. H&E Equipment Services pays out 31.6% of its earnings in the form of a dividend.

Profitability

This table compares Herc and H&E Equipment Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Herc 9.14% -0.88% -0.08%
H&E Equipment Services 10.65% 43.81% 5.25%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Herc and H&E Equipment Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Herc 0 3 4 0 2.57
H&E Equipment Services 1 0 4 0 2.60

Herc presently has a consensus target price of $59.60, indicating a potential downside of 7.50%. H&E Equipment Services has a consensus target price of $35.60, indicating a potential downside of 11.20%. Given Herc’s higher possible upside, research analysts clearly believe Herc is more favorable than H&E Equipment Services.

Summary

H&E Equipment Services beats Herc on 10 of the 15 factors compared between the two stocks.

About Herc

Herc Holdings Inc., together with its subsidiaries, operates as an equipment rental supplier. It rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment, as well as generators, and safety supplies and expendables; and provides ProSolutions, an industry specific solution based services, such as pumping solutions, power generation, climate control, remediation and restoration, and studio and production equipment. The company also sells used equipment and contractor supplies, such as construction consumables, tools, small equipment, and safety supplies; provides repair, maintenance, equipment management, and safety training services, as well as offers ancillary services, such as equipment transport, rental protection, cleaning, refueling, and labor. 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 and retail service, hospitality, healthcare, recreation, entertainment production, and special event management customers through its sales team, industry catalogs, as well as through participation and sponsorship of industry events, trade shows, and Internet. As of December 31, 2017, it operated approximately 275 locations in the United States, Canada, China, the United Kingdom, Saudi Arabia, and Qatar. Herc Holdings Inc. is based in Bonita Springs, Florida.

About H&E Equipment Services

H&E Equipment Services, Inc. is an integrated equipment services company. The Company is focused on heavy construction and industrial equipment. As of December 31, 2016, the Company rented, sold and provided parts and services support for four core categories of specialized equipment: hi-lift or aerial work platform equipment; cranes; earthmoving equipment, and industrial lift trucks. The Company’s principal business activities include equipment rentals; new equipment sales; used equipment sales; parts sales, and repair and maintenance services. As of February 16, 2017, the Company had 78 facilities located throughout the West Coast, Intermountain, Southwest, Gulf Coast, Southeast and Mid-Atlantic regions of the United States. The Company rents its heavy construction and industrial equipment to its customers on a daily, weekly and monthly basis. The Company sells new heavy construction and industrial equipment. The Company is a distributor of Grove and Manitowoc crane equipment.

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