This week’s Stock of the Week is overcoming some difficulties and prospering due to infrastructure projects.
Herc Holdings Inc. (HRI), one of the largest equipment-rental companies in North America, was spun off from auto-rental giant Hertz more than two years ago. It is finally moving past pre–spinoff issues involving high debt and old equipment that had to be sold off.
The company’s new CFO, Mark Irion, appointed in mid-2018, has 19 years of experience managing finances at an equipment-rental firm and seems dedicated to margin improvement at Herc. As the firm works down its debt and improves its fleet, it should have positive cash flow this year.
Herc has increased equipment-rental prices as an anticipated upsurge in infrastructure spending is expected to encourage contractors to use more of the items that Herc rents—trucks, trailers, air compressors, earth-moving equipment, generators and items tailored for pumping, power generation, climate control, environmental remediation and much more. Revenue was $1.75 billion in 2017 and will likely be reported as $1.95 billion for 2018 and $2.1 billion next year.
Fiscal year: December. Earnings per share: 2019 est./$4.80…2018 est./$2.15…2017/(-$0.72).
Daniel M. Miller is executive vice president, Gabelli Funds, and portfolio manager of the $66 million Gabelli Focus Five Fund (GWSIX), Rye, New York. Gabelli.com