Avis Jumps on Revised Forecast (CAR, HTZ, DTG, ZIP)
May 1, 2012 by Paul Ausick
Car rental firm Avis Budget Group Inc. (NASDAQ: CAR) revised its first quarter and full-year forecasts sharply this morning, putting a bit of fuel in the tanks of competitors Hertz Global Holdings Inc. (NYSE: HTZ), Dollar Thrifty Automotive Group Inc. (NYSE: DTG), and even Zipcar Inc. (NASDAQ: ZIP).
Avis now forecasts first quarter revenue at $1.6 billion, in-line with the consensus estimate of $1.6 billion and net income of $14 million, which works out to adjusted EPS of around $0.13, versus expectations for an EPS loss of -$0.19. On a GAAP basis the company expects to post a loss of around $23 million, primarily due to a $27 million charge for debt extinguishment.
The better news is that Avis expects full-year EPS to total $2.35-$2.65, far above the current consensus estimate of $1.59. The company attributes the jump to the higher residual value of the company’s fleet on the used car market. The company said that “vehicle rental operations [are] performing moderately better” as well.
Hertz reports first quarter results tomorrow and is expected to post EPS of $0.01 on revenue of $1.96 billion. Dollar Thrifty reports results next week and is expected to post EPS of $1.28 on revenue of $356.14 million. National Car Rental, the world’s largest car rental agency, is privately held and claims annual revenue of around $14 billion.
Zipcar reported a better-than-expected EPS loss of -$0.08 last week for its first quarter. But the company lowered the low-end of its full-year guidance which implied that the company expects slower growth. Shares fell to an intraday low of around $10.00, but have since recovered some to $12.12. Zipcar’s market cap is less than $800 million, far below the other rental firms, and it needs to show share price growth in order to maintain investor enthusiasm.
Shares of Avis are up nearly 20% in the early afternoon today, at $15.78, in a 52-week range of $8.45-$19.24.
Paul Ausick
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