News

Herc Holdings HRI is grappling with significant challenges that are adversely affecting its performance. Escalated operating expenses and a weak macro environment are major headwinds, straining the company’s prospects and making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

HRI: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the June-end quarter earnings has moved 53.6% south over the past 60 days. For 2026, the consensus mark for earnings has been revised 25.5% downward on a year-over-year basis. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Dim Price Performance: A look at the company’s price trend reveals that its shares have declined 7.8% over the year-to-date period, surpassing the Zacks Transportation - Equipment and Leasing industry’s 12.1% growth.

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Weak Zacks Rank: HRI currently has a Zacks Rank #5 (Strong Sell).

Headwinds: HRI’s decline in dollar utilization to 36.4% from 37.6% indicates that the company generated less rental revenues from each dollar invested in its fleet. The fleet acquired through H&E Equipment Services has not yet reached the productivity levels of the existing fleet, which may pressure margins and reduce returns on invested capital.

The company continues to face pressure on its financial stability amid elevated operating expenses. In the first quarter of 2026, total operating expenses rose 38.5% year over year to $453 million. Selling, general and administrative expenses of $146 million, which accounted for 12.8% of the total revenues, surged 23.7% year over year.

Economic uncertainty, high fuel costs due to the war in the Middle East, and evolving tariff policies are affecting operations and elevating compliance risks for HRI. Under these conditions, the company is delaying investments, reassessing forecasts and demanding greater agility, adding further uncertainty to its performance in the current year.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Expeditors International of Washington, Inc. EXPD and International Seaways INSW.

EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Expeditors has an expected earnings growth rate of 11.9% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 13.96%.

INSW currently sports a Zacks Rank #1.

INSW has an expected earnings growth rate of more than 100% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 33.93%.

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