Earnings estimates for
H&E Equipment Services Inc.
(
HEES
) have moved higher in the past week after the provider of
integrated equipment services announced upbeat second quarter 2012
results and debt restructuring initiatives. With an average
earnings surprise of 135.0% over the past four quarters and with
shares nearing their 52-week high, this Zacks #1 Rank (Strong Buy)
looks like a solid growth pick.
Driving Catalysts
On August 2, H&E Equipment Services reported second quarter
earnings of 80 cents per share, surpassing the Zacks Consensus
Estimate by 36% and the year-ago earnings by 275%.
Revenue increased 13% to $209 million on the back of a 26% increase
in Equipment rental revenue and a 12% increase in new equipment
sales. Original acquisition costs improved 11.6% to $809.3 million
while average rental rates spiked 11% year over year. Gross margin
improved 480 basis points to 30.7%.
Recently, the company announced a senior note offering worth $480
million with the expectation of using the proceeds to fund the
purchase/redemption of its 8 3/8% Senior notes due 2016 and payment
of a special cash dividend amounting to $246 million or less (if
approved).
Positive Earnings Momentum
Over the last 7 days, five of 6 estimates increased for 2012,
leading to a 6.9% rise in the Zacks Consensus Estimate to 93 cents
per share. There was a similar trend for 2013, as 5 of 6 estimates
again moved up over the same time frame, raising the Zacks
Consensus Estimate by 8.3% to $1.31.
The Zacks Consensus Estimates represent year-over-year earnings
growth of 258.9% for 2012 and 40.5% for 2013.
Valuation Not So Attractive
H&E Equipment Services is currently trading at a price-to-sales
(P/S) ratio of 0.8, compared with its peer group average of 0.7. On
a forward P/E basis, shares trade at 19.3x, versus the peer group
average of 10.4x. The company offers a ROE of 10.3%, while the peer
group average is at 13.2%.
Though the stock has yet to reach pre-recession price levels, it
started recovering in the second half of 2009. With several ups and
downs, the stock is back on the recovery path and did well in the
first halves of 2011 and 2012. Growth prospects appear bright with
the rising Zacks Consensus Estimate.
H&E Equipment Services Inc. is based in Baton Rouge, Louisiana
and was incorporated in 1961. It operates in the Industrial Goods
sector; focusing primarily on heavy construction and industrial
equipment. As of February 28, 2012, the company operated through 65
full-service facilities in the United States and had a rental fleet
of approximately 17,538 units at year-end 2011. It currently has a
market capitalization of approximately $628 million.
H&E EQUIP SVCS (HEES): Free Stock Analysis
Report
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