As of June 21, 2025, Herc Holdings Inc's estimated intrinsic value ranges from $68.36 to $194.98 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $194.98 | +69.6% |
| Discounted Cash Flow (5Y) | $193.64 | +68.4% |
| Dividend Discount Model (Multi-Stage) | $104.05 | -9.5% |
| Dividend Discount Model (Stable) | $68.36 | -40.5% |
| Earnings Power Value | $174.73 | +52.0% |
Is Herc Holdings Inc (HRI) undervalued or overvalued?
With the current market price at $114.98, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Herc Holdings Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.83 | 0.98 |
| Cost of equity | 7.7% | 10.4% |
| Cost of debt | 6.3% | 7.0% |
| Tax rate | 22.6% | 23.3% |
| Debt/Equity ratio | 1.06 | 1.06 |
| After-tax WACC | 6.2% | 7.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $194 | $10,818M | 84.1% |
| 10-Year Growth | $195 | $10,864M | 71.1% |
| 5-Year EBITDA | $294 | $14,285M | 88.0% |
| 10-Year EBITDA | $340 | $15,886M | 80.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $705M |
| Discount Rate (WACC) | 7.8% - 6.2% |
| Enterprise Value | $9,037M - $11,286M |
| Net Debt | $4,099M |
| Equity Value | $4,938M - $7,187M |
| Outstanding Shares | 35M |
| Fair Value | $142 - $207 |
| Selected Fair Value | $174.73 |
| Metric | Value |
|---|---|
| Market Capitalization | $3990M |
| Enterprise Value | $8089M |
| Trailing P/E | 31.17 |
| Forward P/E | 17.28 |
| Trailing EV/EBITDA | 8.50 |
| Current Dividend Yield | 197.36% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 1.06 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $58.49 |
| Discounted Cash Flow (5Y) | 25% | $48.41 |
| Dividend Discount Model (Multi-Stage) | 20% | $20.81 |
| Dividend Discount Model (Stable) | 15% | $10.25 |
| Earnings Power Value | 10% | $17.47 |
| Weighted Average | 100% | $155.44 |
Based on our comprehensive valuation analysis, Herc Holdings Inc's weighted average intrinsic value is $155.44, which is approximately 35.2% above the current market price of $114.98.
Key investment considerations:
Given these factors, we believe Herc Holdings Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.