Herc Holdings Inc. Common Stock (HRI)

FairStock Score: 44/100 — MIXED

Key Financials

Strengths

• Generates $404 million in annual free cash flow (9.6% yield on market cap)
• Revenue growth of 59.7% demonstrates strong top-line momentum
• Attractive 2.6% dividend yield providing steady income returns

Concerns

• Trades significantly above Graham Number ($6) with negative 1914% margin of safety—limited downside protection
• High leverage at 4.97x debt-to-equity increases financial risk and interest expense burden
• Altman Z-Score of 0.4 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Herc Holdings Inc. Common Stock is a small-cap industrials company valued at $4.2 billion. The business generates $4.4 billion in annual revenue with a 0.5% net margin and $404 million in free cash flow. From a quality standpoint, Herc shows distressed Altman Z-Score of 0.4 warrants caution and modest 0% ROE. On valuation, the stock is commanding a steep 4048.7x multiple, with trades far above its Graham Number ($6) with no margin of safety. Growth dynamics show revenue growing at 59.7% and profit growth of 152.2%. The 2.6% dividend yield adds an income component for patient holders. Our composite FairStock Score of 44/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Herc's 60% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $404 million in annual free cash flow (9.6% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 4049x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer