Avis Budget Group, Inc. (CAR) Identified as Bear of the Day

2 min read | October 22, 2024 04:27 AM PDT | By Team Kalkine Media

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Avis Budget Group, Inc. (CAR) Identified as Bear of the Day — Image source: Shutterstock

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Highlights

Avis Budget Group, Inc. has experienced a significant decline in its earnings outlook for 2024, with recent EPS estimates falling well below consensus expectations.

The company’s stock has decreased by 60% over the past two years, reflecting challenges in the highly competitive vehicle rental industry.

Avis Budget’s total expenses surged by 20.8% year-over-year in 2023, with further increases projected for 2024 due to high fleet costs.

Avis Budget Group, Inc. (NASDAQ:CAR), a prominent player in the car rental industry, has faced substantial challenges in its earnings outlook for 2024. The company's most recent earnings per share (EPS) estimates have been revised downward, coming in significantly below an already diminished consensus. Over the past two years, Avis Budget’s stock has plummeted by 60%, leading many analysts to advise caution regarding the company’s future performance.

Avis Budget operates approximately 10,250 rental locations across 180 countries under its well-known Avis and Budget brands. The majority of these locations are directly managed in North America, Europe, and Australasia, while the company collaborates with licensees in other regions. In addition to its core car rental business, Avis Budget owns the Zipcar brand, recognized as one of the largest car-sharing services globally.

The vehicle rental sector is characterized by intense competition, with major rivals such as Enterprise Holdings, which operates the Enterprise, National, and Alamo brands, and Hertz Global Holdings, which includes the Hertz, Dollar, and Thrifty brands. This competitive landscape has contributed to increased pressure on pricing and service quality.

In 2023, Avis Budget reported a 20.8% rise in total expenses, primarily driven by soaring fleet costs. Estimates suggest that expenses will continue to rise by 15.6% in 2024, with per-unit fleet costs rising by 104% year-over-year in the first half of 2024. The company’s adjusted EPS for 2024 is projected to fall to $7.15, an 83% decrease compared to the previous year’s figure. Additionally, Avis Budget’s EPS estimates for fiscal years 2024 and 2025 are substantially below consensus levels, earning the company a Zacks Rank of #5 (Strong Sell).

Given the declining earnings outlook and market conditions, many analysts recommend caution with respect to Avis Budget’s stock until there are clear signs of recovery and stabilization in its financial performance.

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