HERC HOLDINGS INC (HRI) Stock Analysis
HERC HOLDINGS INC (HRI) Stock Analysis
Overall Grade: F (Concerning)
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HERC HOLDINGS INC faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 45.7% | Above industry average |
| FCF Margin | 21.2% | Strong cash generation |
| Debt/Equity | 4.1x | Elevated debt |
Investment Thesis: Strong return on invested capital of 45.7% suggests durable competitive advantages and efficient capital allocation.
What is HERC HOLDINGS INC's Profitability and ROIC?
HERC HOLDINGS INC generates strong returns on invested capital at 45.7%, indicating efficient capital allocation and competitive advantages.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 45.7% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | 0.1% | Warning | Moderate equity returns |
| Operating Margin | 87.1% | Excellent | Efficient operations |
How Strong is HERC HOLDINGS INC's Cash Flow Quality?
HERC HOLDINGS INC generated $928.0M in free cash flow over the trailing twelve months, representing a 21.2% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1085.0x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 21.2% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $928.0M | Good | Positive cash generation |
| OCF/Net Income | 1085.0x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is HERC HOLDINGS INC's Financial Health?
HERC HOLDINGS INC's debt-to-equity ratio of 4.1x indicates elevated leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 4.1x | Red flag | Elevated leverage |
| Net Cash Position | $-8.0B | Warning | Net debt position |
Is HERC HOLDINGS INC Stock Overvalued or Undervalued?
HERC HOLDINGS INC trades at a P/E of -1236.5x, representing a premium to the sector median of N/A. Free cash flow yield of 20.0% offers attractive cash returns.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -1236.5x | Red flag | Reasonable valuation |
| EV/Sales | 2.6x | Good | Attractive revenue multiple |
| FCF Yield | 20.0% | Excellent | Attractive cash return |
| Dividend Yield | 1.9% | Adequate | Growth focus over income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 45.7% | Top 5% | 7.1x above |
| Free Cash Flow Margin | 21.2% | Top 25% | 2.1x above |
| Operating Margin | 87.1% | Top 5% | 13.8x above |
| Return on Equity (ROE) | 0.1% | Bottom 50% | 0.0x below |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 45.7% (Excellent - Top 5% of sector (median: 6.5%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 21.2% (Excellent - Top 25% of sector (median: 10.0%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 412.1% (Red flag)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 20.0% (Excellent)
Frequently Asked Questions
Q: What is HERC HOLDINGS INC's Return on Invested Capital (ROIC)?
HERC HOLDINGS INC (HRI) has a trailing twelve-month Return on Invested Capital (ROIC) of 45.7%. This compares above the sector median of 6.5%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is HERC HOLDINGS INC's Free Cash Flow Margin?
HERC HOLDINGS INC (HRI) has a free cash flow margin of 21.2%, generating $928.0 million in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is HERC HOLDINGS INC stock overvalued or undervalued?
HERC HOLDINGS INC (HRI) trades at a P/E ratio of -1236.5x, which is above the sector median of N/A. The EV/Sales multiple is 2.6x. Free cash flow yield is 20.0%, which represents an attractive cash return to investors.
Q: Does HERC HOLDINGS INC pay a dividend?
HERC HOLDINGS INC (HRI) currently pays a dividend yield of 1.9%. Including share buybacks, the total shareholder yield is 1.9%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: How much debt does HERC HOLDINGS INC have?
HERC HOLDINGS INC (HRI) has a debt-to-equity ratio of 4.1x with total debt of $8.0 billion. Net debt position is $8.0 billion.
Q: What is HERC HOLDINGS INC's revenue and earnings growth?
HERC HOLDINGS INC (HRI) grew revenue by 22.6% year-over-year. Net income declined by 99.5% year-over-year. Double-digit revenue growth indicates strong demand and market share gains.
Q: How does HERC HOLDINGS INC compare to competitors in Technology?
Compared to other companies in Technology, HERC HOLDINGS INC (HRI) shows: ROIC of 45.7% is above the sector median of 6.5% (Top 0%). FCF margin of 21.2% exceeds the sector median of 10.0% (Top 25% of sector). These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with HERC HOLDINGS INC?
Investors in HERC HOLDINGS INC (HRI) should monitor these potential warning signs: 1) Debt-to-equity of 4.1x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-28. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.