Stock Analysis

H&E Equipment Services, Inc.'s (NASDAQ:HEES) recent 7.8% pullback adds to one-year year losses, institutional owners may take drastic measures

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NasdaqGS:HEES
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A look at the shareholders of H&E Equipment Services, Inc. (NASDAQ:HEES) can tell us which group is most powerful. The group holding the most number of shares in the company, around 79% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$1.0b last week after a 7.8% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 18% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. Hence, if weakness in H&E Equipment Services' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

In the chart below, we zoom in on the different ownership groups of H&E Equipment Services.

View our latest analysis for H&E Equipment Services

ownership-breakdown
NasdaqGS:HEES Ownership Breakdown September 26th 2022

What Does The Institutional Ownership Tell Us About H&E Equipment Services?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that H&E Equipment Services does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at H&E Equipment Services' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:HEES Earnings and Revenue Growth September 26th 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. H&E Equipment Services is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 9.1% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.1% and 7.0%, of the shares outstanding, respectively. Furthermore, CEO Bradley Barber is the owner of 0.6% of the company's shares.

After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of H&E Equipment Services

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can report that insiders do own shares in H&E Equipment Services, Inc.. The insiders have a meaningful stake worth US$73m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand H&E Equipment Services better, we need to consider many other factors. For example, we've discovered 3 warning signs for H&E Equipment Services that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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About NasdaqGS:HEES

H&E Equipment Services

H&E Equipment Services, Inc. operates as an integrated equipment services company.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth5
Past Performance4
Financial Health4
Dividends2

Read more about these checks in the individual report sections or in our analysis model.

High growth potential with proven track record.