H&E Equipment Services (NASDAQ: HEES) and Exponent (NASDAQ:EXPO) are both small-cap industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Profitability

This table compares H&E Equipment Services and Exponent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
H&E Equipment Services 3.69% 38.83% 4.30%
Exponent 16.46% 17.21% 11.99%

Dividends

H&E Equipment Services pays an annual dividend of $1.10 per share and has a dividend yield of 3.4%. Exponent pays an annual dividend of $0.84 per share and has a dividend yield of 1.2%. H&E Equipment Services pays out 107.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Exponent pays out 41.0% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares H&E Equipment Services and Exponent’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
H&E Equipment Services $965.22 million 1.19 $137.07 million $1.02 32.01
Exponent $311.50 million 6.04 $71.89 million $2.05 35.59

H&E Equipment Services has higher revenue and earnings than Exponent. H&E Equipment Services is trading at a lower price-to-earnings ratio than Exponent, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

H&E Equipment Services has a beta of 2.65, indicating that its stock price is 165% more volatile than the S&P 500. Comparatively, Exponent has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Institutional and Insider Ownership

75.2% of H&E Equipment Services shares are owned by institutional investors. Comparatively, 88.7% of Exponent shares are owned by institutional investors. 12.3% of H&E Equipment Services shares are owned by insiders. Comparatively, 2.8% of Exponent shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for H&E Equipment Services and Exponent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
H&E Equipment Services 0 0 2 0 3.00
Exponent 0 1 1 0 2.50

H&E Equipment Services currently has a consensus price target of $31.50, suggesting a potential downside of 3.52%. Exponent has a consensus price target of $79.50, suggesting a potential upside of 8.98%. Given Exponent’s higher possible upside, analysts clearly believe Exponent is more favorable than H&E Equipment Services.

H&E Equipment Services Company Profile

H&E Equipment Services, Inc. is an integrated equipment services company. The Company is focused on heavy construction and industrial equipment. As of December 31, 2016, the Company rented, sold and provided parts and services support for four core categories of specialized equipment: hi-lift or aerial work platform equipment; cranes; earthmoving equipment, and industrial lift trucks. The Company’s principal business activities include equipment rentals; new equipment sales; used equipment sales; parts sales, and repair and maintenance services. As of February 16, 2017, the Company had 78 facilities located throughout the West Coast, Intermountain, Southwest, Gulf Coast, Southeast and Mid-Atlantic regions of the United States. The Company rents its heavy construction and industrial equipment to its customers on a daily, weekly and monthly basis. The Company sells new heavy construction and industrial equipment. The Company is a distributor of Grove and Manitowoc crane equipment.

Exponent Company Profile

Exponent, Inc. (Exponent), along with its subsidiaries, is a science and engineering consulting company. Exponent provides engineering and scientific consulting services to clients around the world. Its service offerings are provided on a project-by-project basis. It operates in two segments: Engineering and Other Scientific, and Environmental and Health. Its Engineering and Other Scientific segment includes biomechanics, biomedical engineering, buildings and structures, civil engineering, construction consulting, materials and corrosion engineering, mechanical engineering, polymer science and materials chemistry, statistical and data sciences, thermal sciences and vehicle analysis services. Its Environmental and Health segment includes chemical regulation and food safety; ecological and biological sciences; environmental and earth sciences, and health sciences. Exponent serves clients in automotive, government, health, insurance, manufacturing and technology, among others.

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