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Herc Rentals’ second-quarter results showed the equipment rental market continues to run at a strong pace, despite recessionary concerns in the United States. This backdrop led us to increase our fair value estimate to $129 from $123 previously. Herc grew rental revenue by 35% year on year, thanks to strong volume and price growth. The latter metric was up 5.5% year on year, as the company has been diligent in responding to inflation.
Herc Holdings is an equipment rental company that was spun out of Hertz Global in 2016. It is currently the third-largest equipment rental company (3% market share) in North America, after United Rentals and Sunbelt Rentals, with a fleet size of $5.1 billion. It serves commercial and residential construction customers, the environmental sector, industrial entities, and entertainment production companies. During much of its 50-year-plus history, the company has rented equipment such as aerial lifts to its customers for intermittent use. More recently, it has broadened its catalog to include a host of specialty items. Separately, Herc Holdings’ strategy now incorporates long-term rentals to industrial customers where Herc maintains its own staff at the customer site.
