Herc (NYSE:HRI – Get Free Report) and Freightcar America (NASDAQ:RAIL – Get Free Report) are both transportation companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.
Earnings & Valuation
This table compares Herc and Freightcar America”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Herc | $3.43 billion | 1.20 | $211.00 million | $4.49 | 32.21 |
| Freightcar America | $494.66 million | 0.34 | -$75.82 million | ($0.93) | -9.52 |
Dividends
Herc pays an annual dividend of $2.80 per share and has a dividend yield of 1.9%. Freightcar America pays an annual dividend of $0.36 per share and has a dividend yield of 4.1%. Herc pays out 62.4% of its earnings in the form of a dividend. Freightcar America pays out -38.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Herc has raised its dividend for 2 consecutive years. Freightcar America is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
93.1% of Herc shares are owned by institutional investors. Comparatively, 32.0% of Freightcar America shares are owned by institutional investors. 1.3% of Herc shares are owned by company insiders. Comparatively, 28.7% of Freightcar America shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Analyst Ratings
This is a summary of current recommendations for Herc and Freightcar America, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Herc | 0 | 2 | 3 | 0 | 2.60 |
| Freightcar America | 0 | 0 | 1 | 0 | 3.00 |
Herc presently has a consensus target price of $139.20, suggesting a potential downside of 3.74%. Freightcar America has a consensus target price of $9.00, suggesting a potential upside of 1.69%. Given Freightcar America’s stronger consensus rating and higher probable upside, analysts clearly believe Freightcar America is more favorable than Herc.
Volatility & Risk
Herc has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500. Comparatively, Freightcar America has a beta of 1.89, meaning that its share price is 89% more volatile than the S&P 500.
Profitability
This table compares Herc and Freightcar America’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Herc | 3.53% | 24.10% | 4.30% |
| Freightcar America | -2.79% | -18.77% | 9.16% |
Summary
Herc beats Freightcar America on 10 of the 17 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 Freightcar America
FreightCar America, Inc., through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. It operates in two segments, Manufacturing and Parts. The company offers a range of railcars, including open top hoppers, mill gondola cars, intermodal and non-intermodal flat cars, coal cars; bulk commodity cars covered hopper cars, coil steel cars, boxcars, woodchip hoppers, aluminum vehicle carriers, and articulated bulk container railcars. It also sells used railcars; rebuilds, converts, and leases railcars; and sells forged, cast, and fabricated parts for various railcars. The company's customers primarily include shippers, railroads, and financial institutions. FreightCar America, Inc. was founded in 1901 and is headquartered in Chicago, Illinois.
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