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HSS Hire Group (LSE: HSS) was firing higher on Thursday after it released fresh details on how it intends to turn around its struggling fortunes. It was last 13% higher on the day

HSS advised that it had identified a further £10m to £14m worth of savings as part of its ongoing cost-cutting drive, adding to the £13m of annualised savings the company has already found.

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Today’s release also offered up plenty more titbits for investors to get their teeth into. The Manchester-based business has discovered “significant potential” to improve the profitability of its tool hire business “by focusing on profit opportunities in relation to customers, products and branches.”

And it said it has identified various ways to improve its commercial proposition, including targeted sales plans which will focus on “the most profitable opportunities and the prioritisation of local markets, with the group continuing to build on its digital competitive advantage.”

The small-cap hopes that these measures should underpin a massive improvement in performance by 2020. At the close of the decade, it expects revenue growth to match that of the broader market, and that rental revenue growth should exceed that of the market.

What’s more, the firm said that it is aiming for an EBITDA margin above 20% and EBITA margin above 9%, as well as leverage of less than three times, and return on assets above 20%.

Bouncing back

Today’s release underlines the promising start chief executive Steve Ashmore — who only took the reins in June — is getting off to.

Indeed, added to recent trading details released by the company, the business certainly appears to have wind in its sails. Rental revenues continue to stabilise, HSS advising in late November that underlying sales were flat year-on-year during July-September. And this marked a considerable improvement from recent months (revenues dropped 3.4% by comparison during the first half).

City analysts are predicting that it will see pre-tax losses narrow to £17.4m in 2017, an improvement from £14.2m the prior year. And in 2018 losses are expected to drop to ‘just’ £4.2m. While HSS has a long way to go to return to profitability, I believe the company could prove a sage pick for contrarian investors today.

A breath of fresh air

Porvair (LSE: PRV) is another stock with solid revenues momentum that you should check out today.

In its latest update in September the filtration specialist advised that, with revenues growth having remained around 8% in Q3, pre-tax profits were running ahead of expectations. With it also advising of “healthy” order books across the group, the stage looks set for Porvair to keep delivering meaty revenues expansion.

It has a strong record of earnings growth behind it, and City analysts are predicting a 9% advance in the year ending November 2018 to keep the run going. And for the current fiscal period, a further 3% advance is forecast.

This results in a forward P/E ratio of 23.4 times, a figure that sails above the widely-regarded value watermark of 15 times. But given the success of Porvair’s ongoing acquisition drive, not to mention the brilliant long-term revenues opportunities created by its revved-up organic investment programme, I reckon the business is worthy of such a tidy premium.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of Porvair. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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