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Headquartered in Baton Rouge, Louisiana, H&E Equipment Services (HEES - Free Report) is one of the largest integrated equipment services companies in the U.S., focused on heavy construction and industrial equipment. It was formed in 2002 through the merger of H&E and ICM.
The company rents, sells and provides parts and service support for four core categories of specialized equipment: 1) hi-lift or aerial platform equipment, 2) cranes, 3) earthmoving equipment, and 4) industrial lift trucks.
Favorable Industry Trends
Manufacturing has been a bright spot of late, in the US as well as globally. November jobs report revealed a strong rise in manufacturing and construction hiring. Manufacturing unemployment is now a record low levels.
With improving economic growth, businesses have stepped up their capital spending, including on heavy equipment.
“Manufacturing—Construction & Mining” is currently ranked 2 out of 265 Zacks Industries (top 1%). Trump's trillion-dollar infrastructure plan, expected to be launched next year, will also benefit the industry.
While hurricanes impacted construction activity in the short-term, in the longer-term the company will benefit from post-hurricane rebuilding effort.
Impressive Third Quarter Results
Third quarter total revenues increased 5.9% or $14.5 million to $259.2 million. Margins improved to 36.3% from 36% a year ago.
Adjusted income increased to $27.1 million or $0.76 per share from $11.7 million or $0.33 per share a year ago. EPS beat the Zacks Consensus Estimate of $0.39 by 95%.
Rental revenues increased 6.0%, new equipment sales 9.3% and used equipment sales increased 7.9%.“Our rental business performed extremely well during the third quarter, capitalizing on the strong broad-based demand in the non-residential construction markets we serve,” said the CEO.
Rising Estimates
After strong results, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and next year are $1.61 per share and $1.54 per share, up from $1.12 and 1.30 respectively, before the results. The company has beaten in three out of last four quarters, with an average quarterly surprise of 35%.
The Bottom Line
HEES is a Zacks Rank #1 (Strong Buy) stock, with Style Score of “A” for Value as well as VGM. Further, it has a very juicy dividend yield of 3%.
The stock is up about 60% this year but is currently trading at a reasonable valuation of 22.8 times forward earnings, in-line with the industry. Additionally, given expected EPS growth of 15.55% over the next 3-5 years, it looks attractive at current valuation.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Bull of the Day: H&E Equipment Services (HEES)
Headquartered in Baton Rouge, Louisiana, H&E Equipment Services (HEES - Free Report) is one of the largest integrated equipment services companies in the U.S., focused on heavy construction and industrial equipment. It was formed in 2002 through the merger of H&E and ICM.
The company rents, sells and provides parts and service support for four core categories of specialized equipment: 1) hi-lift or aerial platform equipment, 2) cranes, 3) earthmoving equipment, and 4) industrial lift trucks.
Favorable Industry Trends
Manufacturing has been a bright spot of late, in the US as well as globally. November jobs report revealed a strong rise in manufacturing and construction hiring. Manufacturing unemployment is now a record low levels.
With improving economic growth, businesses have stepped up their capital spending, including on heavy equipment.
“Manufacturing—Construction & Mining” is currently ranked 2 out of 265 Zacks Industries (top 1%). Trump's trillion-dollar infrastructure plan, expected to be launched next year, will also benefit the industry.
While hurricanes impacted construction activity in the short-term, in the longer-term the company will benefit from post-hurricane rebuilding effort.
Impressive Third Quarter Results
Third quarter total revenues increased 5.9% or $14.5 million to $259.2 million. Margins improved to 36.3% from 36% a year ago.
Adjusted income increased to $27.1 million or $0.76 per share from $11.7 million or $0.33 per share a year ago. EPS beat the Zacks Consensus Estimate of $0.39 by 95%.
Rental revenues increased 6.0%, new equipment sales 9.3% and used equipment sales increased 7.9%.“Our rental business performed extremely well during the third quarter, capitalizing on the strong broad-based demand in the non-residential construction markets we serve,” said the CEO.
Rising Estimates
After strong results, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and next year are $1.61 per share and $1.54 per share, up from $1.12 and 1.30 respectively, before the results. The company has beaten in three out of last four quarters, with an average quarterly surprise of 35%.
The Bottom Line
HEES is a Zacks Rank #1 (Strong Buy) stock, with Style Score of “A” for Value as well as VGM. Further, it has a very juicy dividend yield of 3%.
The stock is up about 60% this year but is currently trading at a reasonable valuation of 22.8 times forward earnings, in-line with the industry. Additionally, given expected EPS growth of 15.55% over the next 3-5 years, it looks attractive at current valuation.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>