Herc (NYSE:HRI) versus Toromont Industries (OTCMKTS:TMTNF) Financial Analysis

Toromont Industries (OTCMKTS:TMTNF) and Herc (NYSE:HRI) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Toromont Industries	9.25%	15.53%	9.42%
Herc	1.01%	10.33%	1.44%

Analyst Ratings

This is a summary of current ratings and price targets for Toromont Industries and Herc, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toromont Industries	0	3	4	0	2.57
Herc	0	2	6	1	2.89

Herc has a consensus target price of $178.43, suggesting a potential upside of 45.03%. Given Herc’s stronger consensus rating and higher probable upside, analysts plainly believe Herc is more favorable than Toromont Industries.

Insider & Institutional Ownership

93.1% of Herc shares are held by institutional investors. 2.2% of Herc shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Toromont Industries pays an annual dividend of $1.62 per share and has a dividend yield of 1.0%. Herc pays an annual dividend of $2.80 per share and has a dividend yield of 2.3%. Toromont Industries pays out 49.4% of its earnings in the form of a dividend. Herc pays out 190.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Herc has raised its dividend for 2 consecutive years. Herc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Toromont Industries and Herc”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toromont Industries	$3.72 billion	3.49	$355.41 million	$3.28	48.48
Herc	$4.86 billion	0.85	$1.00 million	$1.47	83.69

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

Summary

Herc beats Toromont Industries on 10 of the 17 factors compared between the two stocks.

About Toromont Industries

Toromont Industries Ltd. provides specialized capital equipment in Canada, the United States, and internationally. It operates in two segments, Equipment Group and CIMCO. The Equipment Group segment engages in the sale, rental, and service of mobile equipment for Caterpillar and other manufacturers; sale, rental, and service of engines used in various applications, including industrial, commercial, marine, on-highway trucks, and power generation; and sale of complementary and related products, parts, and services. This segment serves road building, mining, aggregates, infrastructure, residential and commercial construction, power generation, agriculture, forestry, and waste management markets. The CIMCO segment is involved in the design, engineering, fabrication, installation, and after-sale support of refrigeration systems in industrial and recreational markets. This segment primarily serves beverage and food processing, cold storage, food distribution, mining, and recreational ice rink sectors. Toromont Industries Ltd. was founded in 1961 and is headquartered in Concord, Canada.

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.