Herc (NYSE:HRI) Posts Earnings Results, Beats Estimates By $0.99 EPS

Key Points

• Herc beat quarterly earnings expectations: EPS was $3.91 versus the $2.92 consensus, while revenue reached $1.36 billion, up 4.6% year over year and slightly above estimates.
• Strong rental demand led to higher guidance: Equipment rental revenue rose nearly 12%, utilization improved, and Herc lifted its full-year targets to approximately $4.513 billion in rental revenue and $2.13 billion in adjusted REBITDA.
• Management is investing for future growth, adding roughly $150 million in fleet capital expenditures focused on specialty equipment for mega-projects. However, core rental margins declined amid inflation and higher operating costs, and CEO Larry Silber is scheduled to become executive chairman in 2027.

Herc (NYSE:HRI - Get Free Report) released its quarterly earnings results on Tuesday. The transportation company reported $3.91 earnings per share for the quarter, topping the consensus estimate of $2.92 by $0.99, FiscalAI reports. The business had revenue of $1.36 billion during the quarter, compared to analysts' expectations of $1.35 billion. Herc had a return on equity of 10.33% and a net margin of 1.01%. The firm's revenue for the quarter was up 4.6% compared to the same quarter last year. During the same period last year, the firm posted $2.22 EPS.

Here are the key takeaways from Herc's conference call:

• Third-quarter performance was strong: equipment rental revenue rose nearly 12% on less than 2% average OEC fleet growth, while dollar utilization increased 360 basis points and adjusted REBITDA margin expanded to 44.2%.
• Herc raised its full-year outlook, targeting approximately $4.513 billion of equipment rental revenue and $2.13 billion of adjusted REBITDA, both about 2% above prior guidance, supported by robust mega-project demand and growing revenue synergies.
• Management plans to invest an additional roughly $150 million of net fleet CapEx, primarily in specialty equipment tied to identified, multi-year mega-project assignments; executives said the assets should begin contributing to REBITDA in the fourth quarter and strengthen the 2027 earnings base.
• CEO Larry Silber will transition to executive chairman on January 1, 2027, with longtime executive Aaron Birnbaum becoming CEO; management characterized the change as a planned succession reflecting leadership continuity.
• Core rental REBITDA margin declined 70 basis points to 45.2%, as operating-cost inflation, higher incentive compensation, and fuel and freight costs more than offset rental growth and pricing improvements. Local markets remain stable but commercial construction is still pressured by interest-rate sensitivity, while management said pricing has not yet fully offset inflation.

Herc Stock Performance

HRI stock opened at $140.90 on Tuesday. The firm has a market cap of $4.71 billion, a PE ratio of 95.85 and a beta of 2.04. The company has a current ratio of 1.10, a quick ratio of 1.10 and a debt-to-equity ratio of 4.22. The stock has a 50-day moving average price of $140.38 and a 200-day moving average price of $139.59. Herc has a 1-year low of $88.45 and a 1-year high of $188.35.

Herc Announces Dividend

The company also recently announced a quarterly dividend, which was paid on Wednesday, September 16th. Investors of record on Wednesday, September 2nd were issued a $0.70 dividend. The ex-dividend date was Wednesday, September 2nd. This represents a $2.80 annualized dividend and a yield of 2.0%. Herc's payout ratio is presently 190.48%.

Wall Street Analyst Weigh In

Several research firms have weighed in on HRI. Citigroup lowered their price objective on Herc from $175.00 to $150.00 and set a "buy" rating on the stock in a research report on Monday, October 12th. Zacks Research raised Herc from a "hold" rating to a "strong-buy" rating in a research report on Monday, September 14th. BNP Paribas Exane increased their price objective on shares of Herc from $160.00 to $165.00 and gave the stock a "neutral" rating in a research note on Wednesday, July 29th. KeyCorp lifted their price target on Herc from $165.00 to $185.00 and gave the company an "overweight" rating in a research note on Wednesday, July 29th. Finally, Wells Fargo & Company lowered their price objective on shares of Herc from $218.00 to $176.00 and set an "overweight" rating for the company in a research report on Thursday, October 8th. One analyst has rated the stock with a Strong Buy rating, six have given a Buy rating and two have assigned a Hold rating to the stock. Based on data from MarketBeat.com, the stock presently has an average rating of "Moderate Buy" and an average target price of $174.86.

About Herc

Herc Holdings Inc, operating primarily through the Herc Rentals brand, is an equipment rental supplier serving construction, industrial, commercial and government customers. The company provides access to equipment and related services intended to help customers complete projects without purchasing and maintaining their own fleets.

Its rental fleet includes aerial work platforms, earthmoving equipment, material-handling equipment, trucks and trailers, power generation and climate-control equipment, pumps, and general tools.

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