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Bear of the Day: H&E Equipment Services (HEES)

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H&E Equipment Services, Inc. (HEES - Free Report) got hit by the COVID-19 slowdown in March. This Zacks Rank #5 (Strong Sell) saw revenue decline 8.8% in the first quarter.

H&E Equipment Services rents, sells and provides parts and service support in the United States for specialized equipment in 4 core areas: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks.

Another Earnings Beat in the First Quarter

On May 8, H&E Equipment reported its first quarter results and beat the Zacks Consensus by $0.07. Earnings were $0.30 versus the Consensus Estimate of $0.23.

Revenue fell 8.8% to $285.9 million down from $313.6 million a year ago.

New equipment sales fell 47.8% to $30.9 million from $59.1 million in the prior year as the COVID-19 pandemic caused businesses to get cautious.

Used equipment sales actually rose 5.3% to $31.2 million, up from $29.6 million a year ago.

2020 and 2021 Estimates are Cut

H&E Equipment is an essential business, so they have remained operating throughout but the analysts are bearish on the rest of the year as the pandemic continues to impact the US economy.

2 estimates were cut in the last 2 months for 2020 which pushed the Zacks Consensus Estimate down to $0.78 from $2.13 just 90 days before.

That's a decline of 71% as the company made $2.67 in 2019.

Analysts also cut 2021 which pushed down the Zacks Consensus Estimate to $1.43 from $2.34 just 3 months before.

Shares Up Big Off the Lows

Like many stocks, H&E Equipment's shares fell sharply in the coronavirus sell-off and has now staged a big recovery.

Shares are up 55.4% in the last 3 months, but still remain down 45.7% year-to-date.

Because of the earnings cuts, they're not cheap on a P/E level, with a forward P/E of 23.7.

The company does reward shareholders and is still paying its dividend, which yields 5.9%.

If you're looking for a company in the equipment rental industry that has a better Zacks Rank, United Rentals (URI - Free Report) is a Zacks Rank #3 (Hold) but its 2020 earnings are also expected to fall 38.9%.

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