Head to Head Comparison: Herc (NYSE:HRI) and Aercap (NYSE:AER)

Herc (NYSE:HRI) and Aercap (NYSE:AER) are both transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Analyst Ratings

This is a breakdown of recent recommendations for Herc and Aercap, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Herc	0	2	3	0	2.60
Aercap	1	1	6	0	2.63

Herc currently has a consensus price target of $144.60, indicating a potential upside of 10.60%. Aercap has a consensus price target of $122.57, indicating a potential downside of 0.85%. Given Herc’s higher possible upside, equities research analysts clearly believe Herc is more favorable than Aercap.

Insider & Institutional Ownership

93.1% of Herc shares are held by institutional investors. Comparatively, 96.4% of Aercap shares are held by institutional investors. 1.3% of Herc shares are held by company insiders. Comparatively, 0.5% of Aercap shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Herc and Aercap’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Herc	0.61%	20.77%	3.38%
Aercap	36.93%	13.13%	3.11%

Volatility and Risk

Herc has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500. Comparatively, Aercap has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Earnings & Valuation

This table compares Herc and Aercap”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Herc	$3.57 billion	1.22	$211.00 million	$0.86	152.03
Aercap	$8.00 billion	2.89	$2.10 billion	$16.08	7.69

Aercap has higher revenue and earnings than Herc. Aercap is trading at a lower price-to-earnings ratio than Herc, indicating that it is currently the more affordable of the two stocks.

Dividends

Herc pays an annual dividend of $2.80 per share and has a dividend yield of 2.1%. Aercap pays an annual dividend of $1.08 per share and has a dividend yield of 0.9%. Herc pays out 325.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Aercap pays out 6.7% of its earnings in the form of a dividend. Herc has raised its dividend for 2 consecutive years and Aercap has raised its dividend for 2 consecutive years.

Summary

Aercap beats Herc on 9 of the 16 factors compared between the two stocks.

About Herc

Herc Holdings Inc., together with its subsidiaries, operates as an equipment rental supplier. It rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment, as well as generators, and safety supplies and expendables; and provides ProSolutions, an industry specific solution based services, such as pumping solutions, power generation, climate control, remediation and restoration, and studio and production equipment. The company also sells used equipment and contractor supplies, such as construction consumables, tools, small equipment, and safety supplies; provides repair, maintenance, equipment management, and safety training services, as well as offers ancillary services, such as equipment transport, rental protection, cleaning, refueling, and labor. It serves non-residential and residential construction, specialty trade, restoration, remediation and environment, and facility maintenance contractors; industrial manufacturing industries, including automotive and aerospace, power, metals and mining, agriculture, pulp, paper and wood, food and beverage, and refineries and petrochemical industries; infrastructure and government sectors; and commercial and retail service, hospitality, healthcare, recreation, entertainment production, and special event management customers through its sales team, industry catalogs, as well as through participation and sponsorship of industry events, trade shows, and Internet. As of December 31, 2017, it operated approximately 275 locations in the United States, Canada, China, the United Kingdom, Saudi Arabia, and Qatar. Herc Holdings Inc. is based in Bonita Springs, Florida.

About Aercap

AerCap Holdings N.V. engages in the lease, financing, sale, and management of commercial flight equipment in China, Hong Kong, Macau, the United States, Ireland, and internationally. The company offers aircraft asset management services, such as remarketing aircraft and engines; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft and engines; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also include periodically inspecting the leased aircraft and engines; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft and engines; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and engine valuations; and providing market research services. In addition, the company provides cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and corporate secretarial services consisting of the preparation of budgets and financial statements. Further, it offers airframe and engine parts and supply chain solutions to airlines; maintenance, repair, and overhaul service providers; and aircraft parts distributors. The company had a portfolio of owned, managed, or on order aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.