Last week, you might have seen that Herc Holdings Inc. (NYSE:HRI) released its second-quarter result to the market. The early response was not positive, with shares down 3.6% to US$146 in the past week. It was not a great result overall. While revenues of US$848m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 13% to hit US$2.46 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Herc Holdings' nine analysts is for revenues of US$3.48b in 2024. This reflects a reasonable 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 13% to US$13.53. In the lead-up to this report, the analysts had been modelling revenues of US$3.46b and earnings per share (EPS) of US$13.75 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$187, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Herc Holdings, with the most bullish analyst valuing it at US$307 and the most bearish at US$125 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Herc Holdings' revenue growth is expected to slow, with the forecast 5.5% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.6% annually. Factoring in the forecast slowdown in growth, it looks like Herc Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$187, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Herc Holdings analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Herc Holdings (including 1 which can't be ignored) .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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