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Why Is Herc Holdings (HRI) Up 9.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Herc Holdings (HRI - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Herc Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Herc Holdings Q2 Earnings Beat Estimates
Herc Holdings reported second-quarter 2026 adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of 76 cents by 88.2%. However, earnings declined on a year-over-year basis. Revenues of $1.20 billion surpassed the consensus mark of $1.15 billion by 4.8% and increased 20.2% year over year. This year-over-year increase was owing to a 23% increase in equipment rental revenues resulting from the larger fleet size after the H&E acquisition, higher mega-project activity and revenue synergies. Dollar utilization improved 100 basis points to 39.3%.
Adjusted EBITDA increased 18.8% year over year to $487 million. The adjusted EBITDA margin contracted 50 basis points to 40.4%, primarily due to higher fuel and transportation costs.
Equipment rental revenues increased 23.2% year over year to $1.07 billion. The business benefited from the expanded fleet, stronger volume on mega projects and cross-selling opportunities created by the H&E transaction. Sales of rental equipment rose 3.8% year over year to $110 million as Herc continued adjusting fleet mix to customer demand. Service and other revenues increased 11.1% year over year to $10 million, while sales of new equipment, parts and supplies fell 29.4% year over year to $12 million.
Average fleet size increased 20.4% year over year, primarily reflecting the H&E acquisition. The fleet totaled approximately $9.6 billion at original equipment cost at the end of June, while its average age remained 46 months.
Dollar utilization, which measures rental revenue relative to average fleet cost, rose to 39.3% from 38.3%. Compared with the prior-year pro forma figure, utilization improved 220 basis points as fleet efficiency strengthened and the mix shifted toward higher-return equipment. Fleet expenditures at original equipment cost totaled $451 million during the reported quarter.
Direct operating expenses increased 29.6% year over year to $491 million and represented 45.8% of equipment rental revenues (up from 43.6%). The increase reflected the acquired H&E operations, newer locations that require time to mature and higher transportation and fuel costs.
Rental equipment depreciation rose 24.1% year over year to $242 million because of the larger fleet. Non-rental depreciation and amortization increased 66.7% year over year to $75 million, mainly due to acquired intangible assets and business expansion.
Selling, general and administrative expenses increased 22% year over year to $155 million, but declined slightly as a percentage of equipment rental revenues to 14.5%. Interest expense climbed 46.5% year over year to $126 million, reflecting debt issued to finance the H&E acquisition.
Herc Holdings exited the second quarter with cash and cash equivalents of $43 million, flat sequentially. Long-term debt was $7.88 billion compared with $7.95 billion at the prior-quarter end. First-half operating cash flow increased to $591 million from $412 million. Free cash flow nearly doubled to $202 million from $103 million despite higher investment in rental equipment.
Herc Holdings increased its full-year equipment rental revenue guidance to $4.38-$4.48 billion from $4.28-$4.40 billion. The company now expects adjusted EBITDA of $2.05-$2.13 billion compared with its previous range of $2-$2.1 billion.
Net rental equipment capital expenditures are projected to be between $850 million and $950 million, up from $500-$800 million. Gross capital expenditures are now expected to be between $1.25 billion and $1.4 billion (prior view: $800 million to $1.1 billion).
Management expects incremental revenue synergies of $100-$120 million and incremental cost synergies of $90 million in 2026. The company targets fully realized annual cost synergies of $125 million by year-end. Full-year free cash flow is expected to range from $250 million to $350 million after strategic fleet investment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 27.31% due to these changes.
VGM Scores
Currently, Herc Holdings has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Interestingly, Herc Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Herc Holdings is part of the Zacks Transportation - Equipment and Leasing industry. Over the past month, Westinghouse Air Brake Technologies (WAB - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended June 2026 more than a month ago.
Wabtec reported revenues of $3.18 billion in the last reported quarter, representing a year-over-year change of +17.5%. EPS of $2.76 for the same period compares with $2.27 a year ago.
Wabtec is expected to post earnings of $2.69 per share for the current quarter, representing a year-over-year change of +16%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Wabtec. Also, the stock has a VGM Score of D.
View the Zacks #1 Rank List
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Why Is Herc Holdings (HRI) Up 9.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Herc Holdings (HRI - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Herc Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Herc Holdings Q2 Earnings Beat Estimates
Herc Holdings reported second-quarter 2026 adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of 76 cents by 88.2%. However, earnings declined on a year-over-year basis. Revenues of $1.20 billion surpassed the consensus mark of $1.15 billion by 4.8% and increased 20.2% year over year. This year-over-year increase was owing to a 23% increase in equipment rental revenues resulting from the larger fleet size after the H&E acquisition, higher mega-project activity and revenue synergies. Dollar utilization improved 100 basis points to 39.3%.
Adjusted EBITDA increased 18.8% year over year to $487 million. The adjusted EBITDA margin contracted 50 basis points to 40.4%, primarily due to higher fuel and transportation costs.
Equipment rental revenues increased 23.2% year over year to $1.07 billion. The business benefited from the expanded fleet, stronger volume on mega projects and cross-selling opportunities created by the H&E transaction. Sales of rental equipment rose 3.8% year over year to $110 million as Herc continued adjusting fleet mix to customer demand. Service and other revenues increased 11.1% year over year to $10 million, while sales of new equipment, parts and supplies fell 29.4% year over year to $12 million.
Average fleet size increased 20.4% year over year, primarily reflecting the H&E acquisition. The fleet totaled approximately $9.6 billion at original equipment cost at the end of June, while its average age remained 46 months.
Dollar utilization, which measures rental revenue relative to average fleet cost, rose to 39.3% from 38.3%. Compared with the prior-year pro forma figure, utilization improved 220 basis points as fleet efficiency strengthened and the mix shifted toward higher-return equipment. Fleet expenditures at original equipment cost totaled $451 million during the reported quarter.
Direct operating expenses increased 29.6% year over year to $491 million and represented 45.8% of equipment rental revenues (up from 43.6%). The increase reflected the acquired H&E operations, newer locations that require time to mature and higher transportation and fuel costs.
Rental equipment depreciation rose 24.1% year over year to $242 million because of the larger fleet. Non-rental depreciation and amortization increased 66.7% year over year to $75 million, mainly due to acquired intangible assets and business expansion.
Selling, general and administrative expenses increased 22% year over year to $155 million, but declined slightly as a percentage of equipment rental revenues to 14.5%. Interest expense climbed 46.5% year over year to $126 million, reflecting debt issued to finance the H&E acquisition.
Herc Holdings exited the second quarter with cash and cash equivalents of $43 million, flat sequentially. Long-term debt was $7.88 billion compared with $7.95 billion at the prior-quarter end. First-half operating cash flow increased to $591 million from $412 million. Free cash flow nearly doubled to $202 million from $103 million despite higher investment in rental equipment.
Herc Holdings increased its full-year equipment rental revenue guidance to $4.38-$4.48 billion from $4.28-$4.40 billion. The company now expects adjusted EBITDA of $2.05-$2.13 billion compared with its previous range of $2-$2.1 billion.
Net rental equipment capital expenditures are projected to be between $850 million and $950 million, up from $500-$800 million. Gross capital expenditures are now expected to be between $1.25 billion and $1.4 billion (prior view: $800 million to $1.1 billion).
Management expects incremental revenue synergies of $100-$120 million and incremental cost synergies of $90 million in 2026. The company targets fully realized annual cost synergies of $125 million by year-end. Full-year free cash flow is expected to range from $250 million to $350 million after strategic fleet investment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 27.31% due to these changes.
VGM Scores
Currently, Herc Holdings has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Interestingly, Herc Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Herc Holdings is part of the Zacks Transportation - Equipment and Leasing industry. Over the past month, Westinghouse Air Brake Technologies (WAB - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended June 2026 more than a month ago.
Wabtec reported revenues of $3.18 billion in the last reported quarter, representing a year-over-year change of +17.5%. EPS of $2.76 for the same period compares with $2.27 a year ago.
Wabtec is expected to post earnings of $2.69 per share for the current quarter, representing a year-over-year change of +16%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Wabtec. Also, the stock has a VGM Score of D.