Assessing Herc Holdings’ Valuation After $1.2 Billion Debt Refinancing and Leadership Changes

Herc Holdings (HRI) just priced $1.2 billion in new senior unsecured notes to refinance its 5.50% notes due 2027, a move that tightened up its debt timeline and gave investors clearer visibility on future interest costs.

See our latest analysis for Herc Holdings.

The refinancing announcement, coming on the heels of leadership changes and a fresh quarterly dividend, has helped the stock find its footing recently. Short term share price momentum has improved even as the year to date share price return and 1 year total shareholder return remain deeply negative compared with the strong 5 year total shareholder return.

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With the stock still trading at a double digit discount to analyst targets and a much steeper implied discount to intrinsic value, is Herc quietly setting up a mispriced recovery, or has the market already captured its next leg of growth?

Most Popular Narrative: 15.5% Undervalued

Compared with Herc Holdings last close of $141.29, the most widely followed narrative points to a higher fair value anchored in stronger medium term fundamentals.

The combined company's focus on cross selling specialty equipment and comprehensive fleet offerings positions it to benefit from the ongoing industry shift from ownership to rental, increasing rental penetration rates and expanding both average revenue per customer and margins as the specialty mix rises.

Integration of H&E expands Herc's branch footprint and salesforce capabilities across strategic, high growth regions, enhancing market share, supporting organic top line growth, and improving operating leverage, all of which should drive earnings expansion post integration.

Read the complete narrative.

Curious how this rental super cycle, rising margins and a reset earnings multiple add up to that higher value line? The underlying growth math might surprise you.

Result: Fair Value of $167.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside case still hinges on successful H&E integration and steady construction demand; any stumble here could quickly challenge the recovery narrative.

Find out about the key risks to this Herc Holdings narrative.

Build Your Own Herc Holdings Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just minutes: Do it your way.

A great starting point for your Herc Holdings research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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