Critical Comparison: Fly Leasing (FLY) and H&E Equipment Services (HEES)

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

Dividends

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H&E Equipment Services pays an annual dividend of $1.10 per share and has a dividend yield of 2.8%. Fly Leasing does not pay a dividend. H&E Equipment Services pays out 31.6% of its earnings in the form of a dividend. Fly Leasing has raised its dividend for 6 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Fly Leasing 0.74% 2.74% 0.44%
H&E Equipment Services 10.65% 43.81% 5.25%

Insider and Institutional Ownership

45.3% of Fly Leasing shares are held by institutional investors. Comparatively, 75.9% of H&E Equipment Services shares are held by institutional investors. 11.7% of H&E Equipment Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Fly Leasing has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, H&E Equipment Services has a beta of 2.47, meaning that its share price is 147% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Fly Leasing and H&E Equipment Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fly Leasing 2 0 3 0 2.20
H&E Equipment Services 1 0 4 0 2.60

Fly Leasing presently has a consensus price target of $15.88, indicating a potential upside of 18.47%. H&E Equipment Services has a consensus price target of $35.60, indicating a potential downside of 10.96%. Given Fly Leasing’s higher probable upside, analysts clearly believe Fly Leasing is more favorable than H&E Equipment Services.

Valuation and Earnings

This table compares Fly Leasing and H&E Equipment Services’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fly Leasing $353.25 million 1.09 $2.59 million $0.09 148.89
H&E Equipment Services $1.03 billion 1.38 $109.65 million $3.48 11.49

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

Summary

H&E Equipment Services beats Fly Leasing on 13 of the 17 factors compared between the two stocks.

Fly Leasing Company Profile

Fly Leasing Limited, through its subsidiaries, purchases and leases commercial aircrafts under multi-year contracts to various airlines worldwide. As of December 31, 2017, the company had a portfolio of 85 aircrafts, including 73 narrow-body passenger aircrafts and 12 wide-body passenger aircrafts. Fly Leasing Limited was founded in 2007 and is headquartered in DĂșn Laoghaire, Ireland.

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.

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