Abstract

Herc will report results on February 17, 2026 Pre-Market; this preview compiles last quarter’s actuals and current-quarter forecasts for revenue, gross margin, net profit margin, and adjusted EPS, and reviews market narratives and analyst stances for a balanced expectation set.

Market Forecast

The market’s baseline for the current quarter points to revenue at $1.25 billion with EBIT at $214.88 million and adjusted EPS at $1.90, implying a year-over-year change of 34.71% for revenue, a 2.05% decline for EBIT, and a 51.86% contraction for adjusted EPS; margin forecasts are not specified, but the prior quarter’s profile suggests mid-30% gross margin and low single-digit net margin. Herc’s main business is equipment rentals, which is projected to anchor revenue near $1.12 billion this quarter, while equipment sales and services contribute much smaller portions.

The most promising segment is equipment rental by scale, with estimated revenue of $1.12 billion; the year-over-year trend for the consolidated top line is implied by the forecast growth rate and remains elevated at the company level.

Last Quarter Review

Herc’s previous quarter delivered revenue of $1.30 billion, gross profit margin of 34.13%, GAAP net profit attributable to shareholders of $30.00 million, net profit margin of 2.30%, and adjusted EPS of $2.22, with revenue rising 35.13% year over year and adjusted EPS down 48.97% year over year.

A notable financial highlight was the sharp sequential rebound in GAAP profitability, with quarter-on-quarter net income growth of 185.71% against a still-compressed net margin profile. Main business highlights included equipment rental as the core revenue engine at $1.12 billion, followed by used rental equipment sales at $151.00 million, new equipment, parts and supplies at $18.00 million, and services and other at $13.00 million, underscoring the portfolio’s rental-centric mix.

Current Quarter Outlook

Equipment Rentals as the Stabilizing Core

Equipment rentals remain the central revenue and cash flow driver by a substantial margin, accounting for an estimated 86% of quarterly sales. With the company’s forecast revenue at $1.25 billion, rentals plausibly contribute around $1.12 billion this quarter, underpinning scale and pricing power across end-markets. The trajectory in rental volumes and rate discipline will determine whether the prior quarter’s mid-30% gross margin can be sustained, especially as fleet maintenance and logistics costs normalize post-peak season. Investors should watch utilization trends and any commentary on rate resets, as even modest improvements can translate into material leverage on operating margins given the fixed-cost nature of the depot and service network.

Used Equipment Sales as a Tactical Lever

Sales of used rental equipment were $151.00 million last quarter and form a tactical lever to balance fleet age, capital expenditures, and returns. In a scenario of steady demand but slower EPS growth, the company may prioritize fleet optimization to manage depreciation and enhance return on invested capital. Gross margins on disposals can be volatile, but disciplined execution can support EBIT in the near term, especially when new equipment lead times and pricing remain sensitive to OEM dynamics. The company’s guidance cadence will likely clarify the pace of disposals and the expected impact on margin mix versus rentals.

EPS Sensitivity to Margin Mix and Interest Burden

The forecast for adjusted EPS at $1.90, down 51.86% year over year, signals that mix and expense headwinds outweigh top-line expansion. With EBIT guided to decline 2.05% year over year to $214.88 million while revenue is expected to rise at a mid-30% clip, operating margin compression is implied, likely due to higher costs tied to fleet maintenance, labor, and logistics. Additionally, a higher interest burden can dilute net income despite stable operating profit, which helps explain the disconnect between revenue growth and EPS contraction. Monitoring net interest expense and effective tax rates will be critical to reconcile the gap between EBIT and per-share outcomes this quarter.

Analyst Opinions

Cautious views dominate recent commentary, with analysts emphasizing the risk of margin compression even as revenue growth holds. The majority position highlights that adjusted EPS is set to contract significantly year over year despite healthy revenue expansion, consistent with the company’s forecast indicating adjusted EPS at $1.90 and EBIT down 2.05% year over year. Several analysts note that the rental mix, while robust, may not fully offset inflationary costs and a potentially higher interest expense line, which together pressure bottom-line performance relative to the top line.

Among the noted perspectives, established sell-side voices underscore a preference for evidence of rate discipline and utilization resilience before revising forecasts upward. This aligns with the view that while revenue growth benefits from an expanded fleet and ongoing demand in nonresidential end markets, conversion to earnings per share may be constrained in the near term. The consensus leaning is that the shares may remain sensitive to the company’s commentary on pricing, utilization, and capex pacing; stronger-than-expected rental yields and a tighter capex profile would be the most credible catalysts to improve sentiment. Conversely, any indication of further margin pressure or a step-up in interest cost could validate the cautious stance for this print.