Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Herc (NYSE:HRI) and the best and worst performers in the specialty equipment distributors industry.
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
The 10 specialty equipment distributors stocks we track reported a softer Q2. As a group, revenues missed analysts’ consensus estimates by 1.7%.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Specialty equipment distributors stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
Herc (NYSE:HRI)
Formerly a subsidiary of Hertz (NASDAQ:HTZ) Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE:HRI) provides equipment rental and related services to a wide range of industries.Herc reported revenues of $848 million, up 5.7% year on year. This print exceeded analysts’ expectations by 1.5%. Despite the top-line beat, it was still a slower quarter for the company with a miss of analysts’ earnings estimates.
“In the second quarter, we benefited from positive rental pricing, increasing fleet efficiency, and expanding market share, as we continue to significantly outpace rental-industry growth. Overall, our record second quarter revenue results came in according to our expectations. However, while national mega projects are on plan, we saw a greater deceleration in the local market's growth trajectory versus our forecast, primarily driven by the persistently higher interest-rate environment. The local-revenue deficit was essentially offset by contributions from acquisitions that added 21 locations year to date, including 10 in the second quarter,” said Larry Silber, president and chief executive officer of Herc Rentals.
Interestingly, the stock is up 10.5% since reporting and currently trades at $159.43.
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Best Q2: SiteOne (NYSE:SITE)
Known for distributing John Deere tractors and LESCO turf care products, SiteOne Landscape Supply (NYSE:SITE) provides landscaping products and services to professionals, including irrigation, lighting, and nursery supplies.SiteOne reported revenues of $1.41 billion, up 4.4% year on year, outperforming analysts’ expectations by 1.8%. The business had a strong quarter with a decent beat of analysts’ operating margin estimates and a narrow beat of analysts’ earnings estimates.
SiteOne delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6% since reporting. It currently trades at $152.
Weakest Q2: Alta (NYSE:ALTG)
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.Alta reported revenues of $488.1 million, up 4.2% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 17.7% since the results and currently trades at $6.74.
Hudson Technologies (NASDAQ:HDSN)
Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.Hudson Technologies reported revenues of $75.28 million, down 16.8% year on year. This print came in 4.9% below analysts' expectations. Overall, it was a disappointing quarter as it also produced full-year revenue guidance missing analysts’ expectations and a miss of analysts’ earnings estimates.
Hudson Technologies had the weakest full-year guidance update among its peers. The stock is up 9.8% since reporting and currently trades at $8.27.
Custom Truck One Source (NYSE:CTOS)
Inspired by a family gas station, Custom Truck One Source (NYSE:CTOS) is a distributor of truck and heavy equipment, including sales, rentals, and custom modifications.Custom Truck One Source reported revenues of $423 million, down 7.4% year on year. This print missed analysts’ expectations by 7.3%. It was a disappointing quarter as it also logged full-year revenue guidance missing analysts’ expectations.
Custom Truck One Source had the weakest performance against analyst estimates among its peers. The stock is down 23.9% since reporting and currently trades at $3.54.
This content was originally published on Stock Story
