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Herc Holdings (HRI) is in the equipment rental business to customers that want to build or repair something. It rents a variety of different boom/crane equipment, forklifts and other material handling equipment, scissor platforms, any kind of earth-moving equipment, paving equipment, pumps, fans, all manner of trucks and trailers, tools, generators — even equipment for making movies and TV shows and for putting on big events.

Herc’s Q1 results ripped the cover off the ball. Analysts were looking for $.25 EPS for the seasonally weak Q1 (up from $0.04 in last year’s COVID-19-impacted Q1) and the company produced a whopping $1.09, a record Q1 and 336% upside surprise, on $454 million of revenue.

And the company noted in the call that with Q1 being the seasonally weakest, “things do not get worse in Q2 - Q4.” So the $0.84 beat in Q1 only adds to the earlier consensus of $4.30 for the year, which has now moved all the way up to $6.17 (so, 105% growth) as we presumably put COVID-19 increasingly, but not totally, in the rear view mirror as the year progresses.

But wait, the consensus has gone up an amazing 43% — yet the stock has “only” gone up 18%. So we may be due some more upside here. Adjusted EBITDA was up 25% and EBITDA margin of 40.7% in Q1 was up 680 basis points, and this only gets better after the seasonally slowest quarter of the year.

Pricing is strengthening on rentals and used equipment sales, margins are improving, and the entertainment industry has come back strong after going almost to zero during the worst of it.

There is big demand for filmed entertainment, which has gone from a headwind to a nice tailwind. Both the CEO and the CFO echoed that, “it feels like the beginning of the next up cycle.” So it’s all good here. Meanwhile, the Q1 surprise and the surge in consensus has fueled a rise in the BI Rank from 10.7 to 12.3. Accordingly, HRI is still a "Buy."