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H&E Equipment Services, Inc. (HEES) Soars to 52-Week High, Time to Cash Out?

Have you been paying attention to shares of H&E Equipment (HEES)? Shares have been on the move with the stock up 12% over the past month. The stock hit a new 52-week high of $47.17 in the previous session. H&E Equipment has gained 4.3% since the start of the year compared to the -9.8% move for the Zacks Industrial Products sector and the 13.7% return for the Zacks Manufacturing - Construction and Mining industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2022, H&E Equipment reported EPS of $1.05 versus consensus estimate of $0.86 while it beat the consensus revenue estimate by 7.24%.

For the current fiscal year, H&E Equipment is expected to post earnings of $3.26 per share on $1.22 billion in revenues. This represents a 67.18% change in EPS on a 5.57% change in revenues. For the next fiscal year, the company is expected to earn $3.73 per share on $1.39 billion in revenues. This represents a year-over-year change of 14.57% and 14.16%, respectively.

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Valuation Metrics

H&E Equipment may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

H&E Equipment has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 14.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 14.2X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 6X. Additionally, the stock has a PEG ratio of 0.45. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, H&E Equipment currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if H&E Equipment meets the list of requirements. Thus, it seems as though H&E Equipment shares could still be poised for more gains ahead.

How Does HEES Stack Up to the Competition?

Shares of HEES have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Komatsu Ltd. (KMTUY). KMTUY has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of D.

Earnings were strong last quarter. Komatsu Ltd. beat our consensus estimate by 28.57%, and for the current fiscal year, KMTUY is expected to post earnings of $2.29 per share on revenue of $25.42 billion.

Shares of Komatsu Ltd. have gained 5.3% over the past month, and currently trade at a forward P/E of 9.99X and a P/CF of 6.93X.

The Manufacturing - Construction and Mining industry is in the top 6% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HEES and KMTUY, even beyond their own solid fundamental situation.

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H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report

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