| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 149.55 | 4 |
| Intrinsic value (DCF) | 552.69 | 286 |
| Graham-Dodd Method | 22.04 | -85 |
| Graham Formula | 122.94 | -14 |
Herc Holdings Inc. (NYSE: HRI) is a leading equipment rental supplier operating in the U.S. and internationally, serving diverse industries including construction, industrial manufacturing, infrastructure, government, and commercial facilities. The company offers a broad range of rental equipment, including aerial lifts, earthmoving machinery, material handling tools, and specialized ProSolutions services tailored for industries like power generation, climate control, and entertainment production. Founded in 1965 and headquartered in Bonita Springs, Florida, Herc Holdings has established itself as a key player in the equipment rental market, leveraging a strong sales network, industry partnerships, and digital engagement through trade shows and online platforms. With a market cap of approximately $3.58 billion, Herc Holdings provides value-added services such as equipment maintenance, safety training, and ancillary support, positioning itself as a one-stop solution for equipment rental needs. The company’s diversified customer base and strategic focus on high-growth sectors enhance its resilience in cyclical markets.
Herc Holdings presents a compelling investment case due to its strong market position in the equipment rental industry, diversified revenue streams, and consistent financial performance. The company reported $3.37 billion in revenue and $211 million in net income for the latest fiscal year, with a diluted EPS of $7.40. Its robust operating cash flow of $1.23 billion supports ongoing capital expenditures and debt management, though its high leverage (total debt of $5.07 billion) warrants caution. The equipment rental industry benefits from cyclical demand in construction and infrastructure, but Herc’s beta of 1.86 indicates higher volatility relative to the market. Investors should weigh the company’s growth potential against macroeconomic risks, including interest rate sensitivity and industrial demand fluctuations. The dividend yield, supported by a $2.695 per share payout, adds income appeal.
Herc Holdings competes in a fragmented but growing equipment rental market, differentiated by its extensive fleet, industry-specific solutions (ProSolutions), and nationwide footprint. Its competitive advantage lies in its ability to serve diverse end markets, from construction to entertainment, reducing reliance on any single sector. The company’s focus on high-margin specialty equipment and value-added services enhances customer retention and pricing power. However, competition is intense, with larger players like United Rentals (URI) dominating market share and smaller regional firms offering localized service advantages. Herc’s mid-tier position allows it to balance scale with agility, but it faces pressure to maintain fleet modernization and technological integration (e.g., telematics) to stay competitive. Its debt load, while manageable, limits financial flexibility compared to less leveraged peers. Strategic acquisitions and partnerships could bolster growth, but execution risks remain.