HTZ - Here's why the Hertz and Avis Budget stocks are tumbling
2024-04-25 13:00:12 ET
Avis Budget Group (NASDAQ: CAR) and Hertz (NYSE: HTZ) stock prices tumbled on Thursday as investors focused on the latter’s financial results. Hertz crashed by over 17%, bringing the year-to-date losses to over 54%. It has retreated by over 65% in the past 12 months.
Avis, on the other hand, has fallen by 45% this year and by 38% in the past 12 months amid rising concerns about the car rental industry. In contrast, US indices like the Nasdaq 100 and S&P 500 have jumped by double digits.
Hertz vs Avis Budget stocks
Hertz financial results
In a statement, Hertz said that its revenue rose to $2.1 billion in the first quarter compared to $2.0 billion in the same period in 2022. Its fleet rose from 505k in Q1’23 to 547k even as the company continued to sell its electric vehicles from brands like Tesla and Polestar. Its fleet has dropped from the fourth quarter’s 554k.
Hertz losses mounted during the quarter as the net loss jumped to $567 million from $237 million in the same period in 2023. Most of this loss was because of depreciation as it sold its EVs.
Therefore, the Hertz stock price has crashed as investors re-evaluate its growth prospects. The average estimate is that the company’s revenue will come in at $2.04 billion in the current quarter, a 0.4% drop from the same period last year.
For the year, analysts expect that the company’s revenue will rise to $9.56 billion, up from $9.4 billion in 2023. They also expect its earnings per share (EPS) will come in at 3 cents down from 53 cents a year ago.
Avis quarterly earnings ahead
Avis Budget’s stock crash was because the two companies are in the same industry and investors believe that the trends are the same. The firm will publish its financial results next week.
Analysts expect Avis Budget’s revenue will come in at $2.4 billion, a 5.6% drop from the same period in 2023. They also expect that its loss per share will be 2.4 cents. For the year, the company’s revenue is expected to come in at $11.62 billion, down from $12 billion.
Avis published encouraging results in February that were higher than expected. Its profit per share came in at $4.32, higher than the expected $4.10.
Car rental companies are facing tailwinds and headwinds. The biggest tailwind is that global travel is recovering, which is a positive sign. However, they also carry substantial amounts of debt. Avis has over $4 billion in long-term debt while Hertz has over $3.3 billion.
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