Herc Q3 Earnings: Buying Soaring NYSE:HRI Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Herc Holdings Inc. (NYSE:HRI) is scheduled to report Q3 earnings results on October 22, 2020.

The company is expected to report earnings of $0.80/share on revenue of $432.5 million. The consensus earnings per share (EPS) of $0.80/share is based on a poll of 8 analysts and represents a decline in eps of −45.8% over the same quarter last year, when the company reported earnings of $1.48/share.

The revenue forecast of $432.5 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −14.9%. Last year the company reported $508.1 million in revenue for the quarter.

Expected to report EPS contraction of −45.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $432.46 $508.10 −14.9%
EPS $0.80 $1.48 −45.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Herc Holdings Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.59 $0.25 142.0% Beat
Q1, 2020 -$0.17 $0.04 123.5% Beat
Q4, 2019 $1.56 $1.33 −14.7% Missed
Q3, 2019 $1.78 $1.48 −16.7% Missed
Q2, 2019 $0.33 $0.52 57.6% Beat
Q1, 2019 -$0.24 -$0.23 −4.2% Missed
Q4, 2018 $1.13 $1.23 9.3% Beat
Q3, 2018 $0.93 $1.66 78.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $35.42 $36.17 2.1% Increase
April 23, 2020 $21.37 $22.12 3.5% Increase
February 27, 2020 $37 $36.68 −0.9% Decline
October 23, 2019 $47.16 $42.54 −9.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.43, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.43 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Herc Holdings Inc. is currently trading at $45.21/share, down −2.1% for the day. The company is trading at approximately 89.0% of its 52-week high of $50.81/share. The company’s stock price is up 25.0% since the last earnings report and up 2.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.11 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HRI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 30.80 and a forward P/E multiple of 22.10.

Herc Holdings Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.08. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $45.21
P/E Ratio 30.8x
P/E Ratio (Fwd) 22.1x
PEG Ratio −0.7
Total Debt / Total Capital 62.9%
Levered Free Cash Flow $207.1 million
EV / EBITDA 12.0x

Finbox

Herc Holdings Inc. is a small-cap stock with a market capitalization of $1.318 billion and a total enterprise value of $3.551 billion. The company operates in the Industrials sector and the Trading Companies & Distributors industry.

Herc Holdings Inc., through its subsidiaries, operates as an equipment rental supplier primarily 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, such as power generation, climate control, remediation and restoration, 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 and retail service, 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.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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