H&E Equipment Services (HEES) announced the acquisition of Neff Corporation (NEFF) on July 27 and at the same time released news of a solid beat of the Zacks Consensus Estimate. The company topped forecasts by 33% but most of the attention was paid to the $1.2B deal.
The Zacks Rank is focused on the movement of earnings estimates. The Zacks Consensus Estimate only has a number for FY2018, and that estimate has been moving up. Roughly 90 days ago the number stood at $1.12 but following the big earnings beat, the number moved higher to $1.36.
H&E Equipment Services, Inc. is one of the largest integrated equipment services companies in the United States with full-service facilities throughout the Intermountain, Southwest, Gulf Coast & Southeast regions of the United States. The Company is focused on heavy construction & industrial equipment and rents, sells & provides parts & service support for four core categories of specialized equipment they are hi-lift or aerial platform equipment, cranes, earthmoving equipment & industrial lift trucks. By providing equipment rental, sales, & on-site parts, repair & maintenance functions under one roof, the Company is a one-stop provider for its customers' varied equipment needs. This full service approach provides the Company with multiple points of customer contact, enabling it to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal & provides cross-selling opportunities among its new & used equipment sales, rental, parts sales & service operations.
Over the last four reports, there were two beats and two misses of the Zacks Consensus Estimate. The most recent beat was the huge 33% positive earnings surprise posted in July. That followed a negative earnings surprise of 6%.
The quarter prior to that saw a beat of the Zacks Consensus Estimate of $0.05 and that translated into a positive earnings surprise of 16%. If you are any good at math you see that I have present three of the four recent reports with two beats and one only miss. That means the last report was also a miss.
I see a forward earnings multiple of only 20x and that is slightly below the 21x trailing multiple. The price to book multiple of 6x will keep most of the value minded investors out of the stock. The price to sales multiple of about 1x is pretty low, so management might want to focus on where they can find some more revenue growth (outside of the pending acquisition).
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