On Dec 31, 2014, Zacks Investment Research upgraded H&E Equipment Services Inc. (HEES) to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).
Why the Upgrade?
H&E Equipment Services Inc.’s third-quarter 2014 earnings of 43 cents per share improved 8% year over year. Total revenues edged up 1.7% to $275 million in the quarter. The strength in rental demand and solid growth in its parts and service businesses were the primary drivers of revenue growth.
The company delivered another strong quarter as it continued to successfully leverage the recovery in its wide-ranging commercial construction end user markets. In addition, the company is benefiting from increasing activity in the energy and petrochemical sectors in its Gulf Coast markets.
H&E Equipment Services’ Gulf Coast and Intermountain regions continue to account for the majority of its revenue and gross profit as a result of high levels of activity in the energy, petrochemical and manufacturing sectors. The company pointed out that oil exploration and production only accounts for approximately 12% of its total revenue and believes that falling oil prices will have little to no impact on the industrial expansion taking place in Louisiana. These projects are driven by low natural gas prices.
Per the company, the current commercial construction environment in the U.S. is positive and is expected to further strengthen in 2015. Nonresidential construction spending continues to grow and this is supported by what H&E Equipment Services’ is experiencing in its end user markets. The company is also well-poised to benefit from significant capital projects in its Gulf Coast region related to major chemical, energy and manufacturing activities beginning 2015.
The company expects further fleet investment during the fourth quarter based on the current demand in its end markets as well as an anticipation of future projects. The company remains focused on solid execution, greater productivity and returns for its shareholders.
Stocks to Consider
Some better-ranked stocks in the sector include ACCO Brands Corporation (ACCO), Alamo Group, Inc. (ALG) and AO Smith Corp. (AOS). While ACCO Brands and Alamo Group sport a Zacks Rank #1 (Strong Buy), AO Smith carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment