Herc Holdings (HRI) just delivered a mixed update that has investors paying closer attention. Revenue jumped roughly 35% year on year and topped expectations, but full year guidance and earnings landed meaningfully below what the market was looking for.
See our latest analysis for Herc Holdings.
That mixed message is showing up in the price action too, with a strong 21.2% 30 day share price return from $155.34 suggesting near term momentum, even as the year to date share price return and 1 year total shareholder return remain firmly negative against a still respectable 5 year total shareholder return.
If this earnings driven move has you rethinking your watchlist, it could be a good moment to scan for other equipment and industrial players using aerospace and defense stocks.
With shares still trading below analyst targets yet up strongly over the last month, the key question now is whether Herc’s current valuation underestimates its growth runway or whether the market is already pricing in a full recovery.
Most Popular Narrative Narrative: 7.6% Undervalued
With Herc Holdings last closing at $155.34 against a narrative fair value near $168, the implied upside rests on a powerful earnings and cash flow story.
Realization of expected acquisition synergies ($350 million in revenue and $125 million in cost synergies), combined with a stabilized workforce and disciplined capital management (including fleet optimization and targeted CapEx), should drive higher EBITDA, free cash flow generation, and accelerate deleveraging, providing upside to long-term earnings and shareholder returns.
Curious how modest growth assumptions, rising margins and a lower future earnings multiple can still justify a higher fair value than today’s price? The narrative’s math might surprise you.
Result: Fair Value of $168.20 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, heavy post acquisition integration challenges and elevated debt costs could still derail margin expansion, slow deleveraging, and cap the upside implied in today’s valuations.
Find out about the key risks to this Herc Holdings narrative.
Build Your Own Herc Holdings Narrative
If you see the story differently or want to dig into the numbers yourself, you can build a customized view in just a few minutes: Do it your way.
A great starting point for your Herc Holdings research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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