Herc Holdings’ 1Q Results Top Estimates As Rental Revenue Picks Up

Herc Holdings’s 1Q results beat analysts’ expectations. Record adjusted EBITDA margins of 40.7% and strong revenues from the ProSolutions and entertainment rental businesses fueled this outperformance.

Herc Holdings’s (HRI) 1Q adjusted earnings of $1.10 per share came in well ahead of analysts’ expectations of $0.25 per share. Total revenues climbed 4% to $453.8 million and surpassed the consensus estimate of $417.23 million.

The company’s Equipment rental revenue was $400.4 million, up 3.6% year-over-year, while pricing decreased 0.3% compared to the year-ago period. Additionally, adjusted EBITDA jumped 25% to $184.6 million. Net rental equipment capital expenditures came in at $50.6 million. (See Herc Holdings stock analysis on TipRanks)

For 2021, revised adjusted EBITDA is expected to land between $800 million and $840 million, while net rental equipment capital expenditures are forecasted to be in the range of $400-$450 million.

Herc Holdings CEO Larry Silber commented, “Our guidance range for adjusted EBITDA now exceeds our pre-pandemic 2019 results by 8% to 13%. Overall, our end markets are showing positive momentum and demand for rental equipment is increasing. We intend to continue to take market share in our specialty businesses and to maximize our operating leverage as revenue growth accelerates in the seasonally strong part of the year.”

Robert W. Baird analyst Mircea Dobre lifted the stock’s price target to $130 from $120 and reiterated a Buy rating after the company’s revenue, adjusted EBITDA, and EPS “all beat materially” in 1Q.

Additionally, Dobre said that pricing and utilization will drive further upside and expects both to demonstrate “robust growth” for the remainder of 2021.

Shares have skyrocketed 337.2% over the past year, while Wall Street analysts are still bullish about the stock. The Strong Buy consensus rating boasts 5 Buy ratings versus 1 Hold rating. Looking ahead, the average analyst price target stands at $113.20, putting upside potential at 11.7% over the next 12 months.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Herc Holdings, with 23.7% of investors increasing their exposure to HRI stock over the past 30 days.

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