HRI

Herc Holdings Inc

Consumer, Event Driven/Special Sit


Presented:05/01/2018
Price:$51.33
Cap:$1.49B
Current Price:$168.02
Cap:$4.77B

Presented

Date05/01/2018
Price$51.33
Market Cap$1.49B
Ent Value$4.04B
P/E Ratio9.38x
Book Value$18.04
Div Yield0%
Shares O/S28.80M
Ave Daily Vol218,301
Short Int5.97%

Current

Price$168.02
Market Cap$4.77B
Herc Holdings, Inc., is an equipment rental suppliers, which offers a portfolio of equipment for rent. The company operates under the Herc Rentals brand in the United States and under the Hertz Equipment Rental brand in Canada and other international locations. It also sells used equipment and contractor supplies such as construction consumables, tools, safety supplies and small equipment; provides repair, maintenance and equipment management services and safety training to certain of its customers; offers equipment re-rental services and provides on-site support to its customers; and provides ancillary services such as equipment transport, rental protection, cleaning, refueling and labor. The company was founded in 2005 and is headquartered in Bonita Springs, FL.

Publicly traded companies mentioned herein: Goldman Sachs Group Inc (GS), H&E Equipment Services Inc (HEES), Herc Holdings Inc (HRI), Hertz Global Holdings Inc (HTZ), United Rentals Inc (URI)

Highlights

The presenter is long Herc Holdings (HRI), which was spun-off from Hertz in June 2016. At ~$51, HRI stock appears to be undervalued relative to comps such as URI and HEES, which trade at slightly richer multiples to EBITDA. With a self-help story for margins following a two-year rebuild of its fleet and sales force that has led to improvements in operating measures, and June rapidly approaching (two years post-spin, HRI could be a target), he believes there could be multiple ways for investors to win. Additionally, he thinks a Goldman Sachs downgrade to “Sell” (from “Neutral”) in late April has created an attractive entry point. Regardless of whether it is margin improvement, a better multiple to EBITDA or equipment value, or that HRI becomes a target, the presenter sees upside for the stock to the $90 - $100 range over the next 12 - 24 months.

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Idea Discussion

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