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HRI (Herc Holdings) WACC % :10.57% (As of Oct. 31, 2024)


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What is Herc Holdings WACC %?

As of today (2024-10-31), Herc Holdings's weighted average cost of capital is 10.57%%. Herc Holdings's ROIC % is 7.86% (calculated using TTM income statement data). Herc Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Herc Holdings WACC % Historical Data

The historical data trend for Herc Holdings's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Herc Holdings WACC % Chart

Herc Holdings Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 11.37 10.48 12.75 10.49 9.48

Herc Holdings Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.25 9.48 9.49 8.90 9.56

Competitive Comparison of Herc Holdings's WACC %

For the Rental & Leasing Services subindustry, Herc Holdings's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Herc Holdings's WACC % Distribution in the Business Services Industry

For the Business Services industry and Industrials sector, Herc Holdings's WACC % distribution charts can be found below:

* The bar in red indicates where Herc Holdings's WACC % falls into.



Herc Holdings WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Herc Holdings's market capitalization (E) is $5940.537 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Sep. 2024, Herc Holdings's latest one-year quarterly average Book Value of Debt (D) is $4707.8 Mil.
a) weight of equity = E / (E + D) = 5940.537 / (5940.537 + 4707.8) = 0.5579
b) weight of debt = D / (E + D) = 4707.8 / (5940.537 + 4707.8) = 0.4421

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.282%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Herc Holdings's beta is 1.90.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.282% + 1.90 * 6% = 15.682%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Sep. 2024, Herc Holdings's interest expense (positive number) was $255 Mil. Its total Book Value of Debt (D) is $4707.8 Mil.
Cost of Debt = 255 / 4707.8 = 5.4165%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 109 / 457 = 23.85%.

Herc Holdings's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.5579*15.682%+0.4421*5.4165%*(1 - 23.85%)
=10.57%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Herc Holdings  (NYSE:HRI) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Herc Holdings's weighted average cost of capital is 10.57%%. Herc Holdings's ROIC % is 7.86% (calculated using TTM income statement data). Herc Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

Herc Holdings Business Description

Traded in Other Exchanges
Address
27500 Riverview Center Boulevard, Bonita Springs, FL, USA, 34134
Herc Holdings is an equipment rental company that was spun out of Hertz Global in 2016. It is currently the third-largest equipment rental company (4% market share) in North America, after United Rentals and Sunbelt Rentals, with a fleet size of $6.4 billion. It serves commercial and residential construction customers, the environmental sector, industrial entities, and entertainment production companies. During much of its 50-year-plus history, the company has rented equipment such as aerial lifts to its customers for intermittent use. More recently, it has broadened its catalog to include a host of specialty items. Separately, Herc Holdings' strategy now incorporates long-term rentals to industrial customers where Herc maintains its own staff at the customer site.
Executives
Aaron Birnbaum officer: SVP & Chief Operating Officer 27500 RIVERVIEW CENTER BLVD., BONITA SPRINGS FL 34134
Tamir Peres officer: SVP&Chief Information Officer 27500 RIVERVIEW CENTER BLVD., BONITA SPRINGS FL 34134
Lawrence Harris Silber director, officer: President & CEO 7 FOX HOLLOW COURT, FLEMINGTON NJ 08822
Christian J Cunningham officer: SVP & Chief HR Officer C/O HERC HOLDINGS INC., 27500 RIVERVIEW CENTER BLVD., BONITA SPRINGS FL 34134
Mark Alan Schumacher officer: VP, CAO and Controller 27500 RIVERVIEW CENTER BLVD, BONITA SPRINGS FL 34134
Carl C Icahn 10 percent owner C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH-1, SUNNY ISLES BEACH FL 33160
Mark Irion officer: SVP & CFO C/O NEFF CORPORATION, SUITE 400, 3750 N.W. 87TH AVENUE, MIAMI FL 33178
Hunter Clark Gary director C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH, SUNNY ISLES FL 33160
Steven D Miller director 16690 COLLINS AVENUE, PH, SUNNY ISLE BEACH FL 33160
Rakesh Sachdev director 3050 SPRUCE STREET, ST LOUIS MO 63103
James H Browning director 3760 JARDIN, HOUSTON TX 77005
Andrew Teno director C/O FIR TREE INC., 55 WEST 46TH STREET, 29TH FLOOR, NEW YORK NY 10036
Shari L Burgess director
Andrew Langham director C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH, SUNNY ISLES FL 33160
Herbert L Henkel director C/O INGERSOLL-RAND COMPANY LIMITED, 155 CHESTNUT RIDGE ROAD, MONTVALE NJ 07645