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Are Investors Undervaluing H&E Equipment (HEES) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

H&E Equipment (HEES) is a stock many investors are watching right now. HEES is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.65, while its industry has an average P/E of 13.48. Over the past year, HEES's Forward P/E has been as high as 14.08 and as low as 8.49, with a median of 11.18.

Investors should also note that HEES holds a PEG ratio of 1.06. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HEES's industry has an average PEG of 1.54 right now. HEES's PEG has been as high as 1.26 and as low as 0.59, with a median of 0.94, all within the past year.

Another valuation metric that we should highlight is HEES's P/B ratio of 4.14. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.45. HEES's P/B has been as high as 4.55 and as low as 2.74, with a median of 3.64, over the past year.

Finally, our model also underscores that HEES has a P/CF ratio of 3.39. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 7.84. Over the past 52 weeks, HEES's P/CF has been as high as 3.73 and as low as 1.83, with a median of 2.93.

These figures are just a handful of the metrics value investors tend to look at, but they help show that H&E Equipment is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HEES feels like a great value stock at the moment.


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