Please ensure Javascript is enabled for purposes of website accessibility

Why H&E Equipment Services Stock Dropped 12%

By Rich Smith - Apr 27, 2017 at 5:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings disappoint.

What happened

Shares of industrial lift-equipment lessor H&E Equipment Services (HEES -4.21%) slid steeply in Thursday trading, closing the day down 12.4%.

So what

Since it's earnings season, you might suspect that an earnings report had something to do with investors' sudden decisions to abandon the stock -- and you'd be right. Thursday morning, H&E Equipment reported its fiscal Q1 2017 earnings, and the news was not great. Revenues declined 8% year over year, to $226.8 million, while profits of $0.15 per share were down by $0.01 in comparison with last year.

Nevertheless, H&E exceeded analyst expectations on earnings -- Wall Street had expected it to report only $0.14 per share. On revenues, however, the company fell short. Street estimates had called for $235.5 million in sales, and H&E didn't even get close to that.

Stock chart going through floor.

Is it time to panic now? Image source: Getty Images.

Now what

Management declined to give guidance on the rest of this year in its report, which may be another factor keeping buyers away from the stock, but here's what the analysts think: According to data from Yahoo! Finance, analysts following H&E stock expect the company will earn about $0.97 per share this year on sales of $973.2 million.

So far -- and admittedly this is very early in the game -- H&E seems to be on track to meet the sales estimate, at least, even if Q1 came in a bit light on that front. As far as earnings go, Q1 profits were only $0.01 below Q1 2016's profits, and last year, H&E earned well over $1 a share. If future quarters see only similarly slim dips in profit versus last year, H&E should be able to meet expectations for this year pretty handily.

In short, despite today's big drop, I don't think there's any need to panic just yet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

H&E Equipment Services, Inc. Stock Quote
H&E Equipment Services, Inc.
$33.88 (-4.21%) $-1.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.