H&E Equipment Services (HEES): Zacks Rank Buy

Zacks

H&E Equipment Services (HEES) is a Zacks #1 Rank (Strong Buy) after making a sustained move into profitability. Strong EPS beats and higher estimates make this stock attractive to aggressive growth investors.

Company Description

H&E Equipment Services, Inc. operates as an integrated equipment services company. The company rents, sells, and provides parts and service support for hi-lift or aerial work platform equipment, crane, earthmoving equipment, and industrial lift truck categories. It offers heavy construction and industrial equipment for rent on a daily, weekly, and monthly basis. As of December 31, 2011, the company's fleet consisted of 17,538 pieces of equipment. H&E Equipment Services, Inc. was founded in 1961 and is headquartered in Baton Rouge, Louisiana.

HEES Tops Expectations Two Straight Times

HEES has beaten the Zacks Consensus Estimate in each of the last two quarters. The first beat came in the September 2011 quarter when the company posted earnings of $0.14, $0.07 ahead of the Zacks Consensus Estimate of $0.07. The stock then moved higher by 12% after that 100% beat.

HEES Recently Reported Earnings

On March 1, 2012 the company reported revenue of $217 million roughly $34 million more than the Zacks Consensus Estimate and more than the $175 million reported in the year ago period. EPS of $0.23 was $0.16 ahead of the estimate or a 228% beat. As a result the stock moved higher by 14%.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $0.60 in February 2012 to the current level of $0.85. Similarly, the 2013 estimates have moved from $0.93 to $1.19 for the same time period.

Valuations

Due to its recent move to profitability, PE valuation metrics are a little skewed. The company trades at 73x trailing twelve months PE compared to a 12x industry average. The forward PE is a much more reasonable 22x, but still well ahead of the 10x industry average. Price to book and price to sales come in pretty much in line with the industry averages.

The Chart

Like many stocks of the past few months, HEES has seen a nice run. The stock crossed the 200 day moving average in late December and has not retested that level since. The 50 day moving average has recently been tested around $19, and that consolidation point from the $20 level makes for a good entry point for aggressive growth investors. HEES is a Zacks #1 Rank (Strong Buy).

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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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