Herc Holdings Inc. (HRI) | Investment Case

1. Company Snapshot

1.a. Company Description

Herc Holdings Inc., through its subsidiaries, operates as an equipment rental supplier 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, which include power generation, climate control, remediation and restoration, pump, trench shoring, 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 facilities, 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.

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1.b. Last Insights on HRI

Herc Holdings Inc.'s recent performance was positively driven by its Q3 2025 earnings beat, with quarterly earnings of $2.22 per share exceeding the Zacks Consensus Estimate of $1.83 per share. The company's acquisition of H&E Equipment Services is yielding results, with management highlighting progress in integrating the two businesses. A "Moderate Buy" consensus rating from brokerages, with four buy recommendations, further supports the stock. Additionally, the company's focus on veteran hiring and career development earned it national recognition from Military Friendly and Military Times.

1.c. Company Highlights

Last Price	141.71
Change Percentage	-1.52%
Open	144.11
Previous Close	143.89
Market Cap ( Millions)	4715
Volume	298874
Year High	235.4
Year Low	96.19
M A 50	130.11
M A 200	128.45

FCF Yield	-8.70%
Dividend Yield	1.95%
ROE	-4.19%
Debt / Equity	78.95%
Net Debt / EBIDTA	170.20%
Price To Book	2.44
Price Earnings Ratio	-68.19
Price To FCF	-11.5
Price To sales	1.14
EV / EBITDA	7.19

2. Herc Holdings' Q3 2025 Earnings: A Strong Performance Amidst Integration Challenges

Herc Holdings reported a robust financial performance in Q3 2025, with equipment rental revenue increasing by approximately 30% year-over-year, driven by the acquisition of H&E and strong contributions from mega projects and specialty solutions. Adjusted EBITDA rose 24% compared to the same period last year, benefiting from higher equipment rental revenue and used equipment sales. The company's adjusted net income for the 9 months ended September 30, 2025, was $74 million, and earnings per share (EPS) came in at $2.22, beating estimates of $1.83. However, adjusted EBITDA margin was impacted by a higher proportion of used equipment sold through the lower-margin auction channel and lower fixed cost absorption due to the ongoing moderation in certain local markets.

Publication Date: Nov -03

                                    📋 Highlights
                                    Revenue & EBITDA Growth:
                                                Equipment rental revenue surged 30% YoY, driven by H&E acquisition and mega projects; Adjusted EBITDA rose 24%, with REBITDA up 22% (46% margin).
Fleet Rightsizing:
                                                $250-300M in fleet disposal activity, 50% completed in Q3; 50 new specialty locations planned, with general locations closures to optimize fleet mix.
Operational Efficiency:
                                                2,500 new team members onboarded into Health & Safety program; 97% perfect days achieved across all branches for safety performance.
Tech & Integration:
                                                Full systems integration completed, including enterprise platform consolidation and ProControl deployment for real-time customer analytics.
Financial Targets:
                                                $342M free cash flow (9M months ended Q3); leverage ratio reduced to 3.8x, aiming for 2-3x by 2027, with $74M adjusted net income in period.

                                

Operational Highlights and Integration Progress

Larry Silber, President and Chief Executive Officer, emphasized the strength of the company's strategic positioning, including its scale, advanced technology platform, and diversification across geographies, end markets, and product lines. The company has made significant progress in integrating H&E, completing a comprehensive sales territory optimization exercise, and deploying its business intelligence suite across the acquired locations. Aaron Birnbaum, Senior Vice President and Chief Operating Officer, highlighted the importance of safety, with all operations achieving at least 97% perfect days on a branch-by-branch measurement.

Fleet Rightsizing and Specialty Equipment Investments

The company is rightsizing its acquired fleet and aligning brand consistency to drive operational efficiency and long-term value. Herc is making targeted investments in specialty equipment to unlock revenue synergies and ensure it is better aligned with high-value opportunities. Mark Humphrey, Senior Vice President and Chief Financial Officer, noted that the company expects to complete the majority of the fleet rightsizing process in the fourth quarter.

Outlook and Valuation

Herc reiterated its 2025 guidance despite integration challenges. The company expects margin improvement to come from equipment rental revenue growth, a shift to a higher margin product mix, and the delivery of full cost synergies. Analysts estimate next year's revenue growth at 13.1%. With a current P/E Ratio of -68.35 and EV/EBITDA of 4.75, the market is pricing in some level of risk. However, the company's ROIC of 6.06% and Net Debt/EBITDA of 1.12x suggest a relatively stable financial position.

Key Takeaways and Future Expectations

The company's focus on training and education is expected to help new sales team members perform at higher levels, and rental rates are being monitored with options to improve service levels or broaden service offerings. With employee retention improving and the integration process progressing, Herc is well-positioned for future growth. The company's plans to increase specialty locations by 50 and revisit revenue synergy targets are expected to drive long-term value creation.

3. NewsRoom

Herc Holdings Announces Pricing of $1,200 Million Senior Unsecured Notes Offering

Dec -02

Source: businesswire.com

Herc Holdings Announces Proposed Private Offering of $1,200 Million of Senior Unsecured Notes

Dec -02

Source: businesswire.com

Herc Holdings Inc. Announces Promotion of Aaron Birnbaum to President

Nov -24

Source: businesswire.com

Herc Rentals Earns National Recognition for Veteran Hiring and Career Development from Military Friendly® and Military Times

Nov -18

Source: businesswire.com

Herc Holdings (HRI) Surpasses Q3 Earnings and Revenue Estimates

Oct -28

Source: zacks.com

Herc Holdings Reports Third Quarter 2025 Results and Reaffirms 2025 Full Year Guidance

Oct -28

Source: businesswire.com

Herc (HRI) Projected to Post Quarterly Earnings on Tuesday

Oct -26

Source: defenseworld.net

Herc Holdings Inc. (NYSE:HRI) Receives Consensus Rating of “Moderate Buy” from Brokerages

Oct -23

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.54%)

6. Segments

Equipment Rental

Expected Growth: 7.5%

Herc Holdings Inc.'s equipment rental segment growth of 7.5% is driven by increasing construction activities, infrastructure development, and rising demand for equipment in the oil and gas industry. Additionally, the company's strategic acquisitions, expanded product offerings, and investments in technology have enhanced operational efficiency, contributing to the segment's growth.

Rental Equipment

Expected Growth: 7.8%

Herc Holdings Inc.'s 7.8% rental equipment growth driven by increasing construction activities, infrastructure development, and rising demand for equipment rentals in the oil and gas sector. Additionally, strategic acquisitions, expanded product offerings, and a strong focus on customer service have contributed to the growth.

New Equipment, Parts and Supplies

Expected Growth: 8.2%

Herc Holdings Inc.'s 8.2% growth in New Equipment, Parts and Supplies is driven by increasing demand for construction and industrial equipment, rising infrastructure spending, and a growing need for equipment replacement. Additionally, the company's strategic acquisitions and investments in digital platforms have enhanced its product offerings and customer experience, contributing to the segment's growth.

Service and Other

Expected Growth: 7.2%

Herc Holdings Inc.'s 7.2% growth in Service and Other segment is driven by increased equipment rental demand, expansion of ProSolutions and ProContractor tools, and strategic acquisitions. Additionally, the company's focus on digital transformation, cost savings initiatives, and a strong used equipment market also contributed to the growth.

7. Detailed Products

Equipment Rentals

Herc Holdings Inc. offers a wide range of equipment rentals for construction, industrial, and commercial applications, including aerial lifts, forklifts, and generators.

ProSolutions

ProSolutions is a suite of services and solutions designed to help customers manage their equipment and operations more efficiently, including equipment tracking, maintenance scheduling, and fleet optimization.

ProContractor

ProContractor is a comprehensive equipment rental and services solution designed specifically for contractors, including equipment rentals, delivery, and maintenance support.

Used Equipment Sales

Herc Holdings Inc. offers a range of used equipment for sale, including aerial lifts, forklifts, and generators, with options for financing and maintenance support.

Disaster Recovery Services

Herc Holdings Inc. provides disaster recovery services, including equipment rentals, logistics, and support, to help customers respond to natural disasters and other crises.

8. Herc Holdings Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Herc Holdings Inc. is medium due to the availability of alternative equipment rental options for customers.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Herc Holdings Inc.'s equipment rental services, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers for equipment and services, but Herc Holdings Inc.'s large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory hurdles involved in entering the equipment rental industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the equipment rental industry, leading to intense competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	74.55%
Debt Cost	6.44%
Equity Weight	25.45%
Equity Cost	15.34%
WACC	8.71%
Leverage	292.93%

11. Quality Control: Herc Holdings Inc. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

McGrath Rent

A-Score: 6.4/10

Value: 4.6

Growth: 7.8

Quality: 6.6

Yield: 4.0

Momentum: 6.5

Volatility: 8.7

1-Year Total Return ->

FTAI Aviation

A-Score: 5.6/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

Avis Budget Group

A-Score: 5.6/10

Value: 9.6

Growth: 5.8

Quality: 5.0

Yield: 1.0

Momentum: 9.5

Volatility: 2.7

1-Year Total Return ->

Fortress Transportation

A-Score: 5.1/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

FTAI Aviation

A-Score: 4.9/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 5.0

Momentum: 6.5

Volatility: 2.0

1-Year Total Return ->

Herc

A-Score: 4.5/10

Value: 8.0

Growth: 7.0

Quality: 3.8

Yield: 3.0

Momentum: 2.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

44.65%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.71%

Herc Holdings Inc. - US42704L1044

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HRI

1.c. Company Highlights

Higher Growth

Fairly Valued

Stable Momentum

Earnings Beats

Revenues Beats

Average Yield

Earnings Miss

Medium Volatility

Revenues Miss

Average Growth

Lower Quality

Average Quality

Cheaper

2. Herc Holdings' Q3 2025 Earnings: A Strong Performance Amidst Integration Challenges

Operational Highlights and Integration Progress

Fleet Rightsizing and Specialty Equipment Investments

Outlook and Valuation

Key Takeaways and Future Expectations

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.54%)

6. Segments

Equipment Rental

Expected Growth: 7.5%

Rental Equipment

Expected Growth: 7.8%

New Equipment, Parts and Supplies

Expected Growth: 8.2%

Service and Other

Expected Growth: 7.2%

7. Detailed Products

Equipment Rentals

ProSolutions

ProContractor

Used Equipment Sales

Disaster Recovery Services

8. Herc Holdings Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Herc Holdings Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

141.71$

Current Price

141.71$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA