Key Stats for HRI Stock
- Price Change for HRI stock: -13.29%
- HRI Share Price as of Feb. 17: $150.12
- 52-Week High: $188.35
- HRI Stock Price Target: $177.45
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What Happened?
Herc Holdings (HRI) stock fell sharply this week after the equipment rental company reported Q4 2025 results that showed strong rental growth but mixed profitability.
Revenue rose about 27% in Q4 2025, while full‑year 2025 total revenue increased about 23%, as the company integrated its large H&E acquisition and benefited from healthy construction and industrial demand.
However, adjusted EBITDA margin fell to 41.5% from 44.4% for the full year because of acquisition‑related redundancy costs and a higher mix of lower‑margin used equipment sales through auctions.
For Q4 specifically, adjusted EBITDA increased 19% year over year to $519 million, but Q4 margin compressed to 42.9% from 46.1% as integration costs remained elevated. The company generated about $521 million of adjusted free cash flow in 2025, which helped support balance‑sheet flexibility and ongoing capital spending.
Management called 2025 a pivotal year as Herc broadened its geographic reach and specialty equipment offerings, but investors focused on the near‑term pressure on margins and leverage. Shares dropped more than 12% in the trading session after earnings as the market reassessed the risk‑reward.
At the same time, Herc issued upbeat guidance for 2026. The company expects equipment rental revenue to grow between 13% and 17%, to between $4.275 billion and $4.4 billion, supported by mega‑projects, specialty penetration, and revenue synergies from the H&E deal.
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What the Market Is Telling Us About HRI Stock
The post‑earnings sell‑off suggests investors are nervous about Herc’s ability to translate its larger scale into higher profitability. While rental revenue growth and synergy targets look healthy, the drop in margins and elevated leverage raised questions about execution risk.
Some analysts still point to upside, with consensus price targets around 177, implying roughly high‑teens return potential from the current share price near 150. However, the stock’s reaction shows that the market wants clearer evidence that integration costs will taper and margins will stabilize.
The company has also been active on buybacks, though net share count has not fallen meaningfully because of acquisition financing and equity compensation. As a result, overall shareholder yield—dividends plus net buybacks—has recently been slightly negative, even though free cash flow remains solid.
If Herc can deliver on its rental revenue growth and synergy plan while gradually lowering leverage, the stock’s downside from here could be limited; if not, the premium valuation and leverage could keep pressure on the shares.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
