Mixed first-quarter report, B.Riley lowers target on H&E Equipment Services stock

B.Riley revised its outlook on H&E Equipment Services (NASDAQ: HEES ) stock on Wednesday, lowering the price target to $71 from the previous price of $75 while reiterating a Buy rating on the stock. The revision follows the company's first-quarter earnings report yesterday, which combined positive and negative financial metrics.

H&E Equipment Services revealed first-quarter 2024 results, noting that revenue and adjusted EBITDA were both higher than expected, but earnings per share (EPS) were lower than expected. This was due to higher interest expense and a higher tax rate than expected. The company's equipment rental revenue increased year over year, helped by a small increase in rental rates that more than offset a small decline in utilization.

The company adjusted its capital spending forecast for this year, citing lower-than-expected utilization. The change coincides with a slowdown in commercial construction starts, in part due to uncertainty about the interest rate environment. Despite these changes, H&E Equipment Services remains committed to its expansion strategy, confirming plans to add 12 to 15 new branches throughout the year.

H&E Equipment Services operates a vast network of 145 locations in 30 states, including pending acquisitions expected to close in the second quarter. The company's management is optimistic about the demand outlook and emphasizes large-scale projects as a key driver of future growth. The outlook suggests a stable demand environment and the company appears to be strategically positioned to take advantage of the opportunity.

B.Riley slightly lowered its adjusted EBITDA forecast for H&E Equipment Services based on first-quarter results and the latest company forecasts. The adjusted price target of $71 reflects these changes, but the investment firm's Buy rating signals continued confidence in the company's prospects.

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Investment Professional Insights

The latest data from InvestingPro provides more context into H&E Equipment Services' (NASDAQ: HEES ) current financial health and market performance. The company has a market capitalization of $1.76 billion and a P/E ratio of 10.21, suggesting the stock may be trading at a reasonable price relative to its earnings. Additionally, the PEG ratio for the trailing twelve months ending in Q4 2023 was 0.38, indicating growth potential when considering a P/E ratio relative to earnings growth.

InvestingPro Tips indicates that H&E Equipment Services operates with a heavy debt load, which is an important factor for investors to consider given its expansion plans. However, the company has maintained its dividend for 11 consecutive years, which may appeal to income-focused investors. The stock's price action has been quite volatile of late, falling significantly last month, but analysts predict the company will be profitable this year. For those seeking a deeper understanding of a company's performance and future prospects, 10 additional InvestingPro tips are also available on the platform.

For readers interested in leveraging these insights for investment decisions, InvestingPro offers a comprehensive analysis tool.Use coupon code PRONEWS24, readers can receive an additional 10% discount for annual or bi-annual Pro and Pro+ subscriptions. This is a valuable investment in itself and can provide a wealth of information to navigate the complex stock market.

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