Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Global vehicle rental giant, Avis Budget Group, Inc. (CAR - Analyst Report) recently acquired Payless Car Rental – the sixth largest car rental company – in an all-cash deal worth approximately $50 million. Avis Budget is contemplating operating Payless as an exclusive brand.

Payless primarily concentrates on deep-value segments of the car rental industry, unlike Avis Budget’s Avis brand and mid-tier Budget brand. Therefore, this acquisition will provide Avis Budget with enormous opportunity to spread its wings in deep-value segment of the car rental industry that is witnessing robust growth.

Payless acquisition is also likely to boost Avis Budget’s worldwide presence by supporting the latter’s mid-tier brand and providing ample opportunities in an additional section of the car rental market. Payless boasts 120 rental locations in the United States, Canada, Europe and South America, including several in key airport locations and generates annual revenue of about $80 million.

Other Notable Acquisitions

In March this year, Avis Budget successfully completed the acquisition of the world’s leading car sharing network company, Zipcar Inc. Avis agreed to buy Zipcar in Jan 2013 for $500 million. This strategic move will facilitate the company in expanding its offerings from car rental to car sharing and help it to compete with rivals such as United Rentals, Inc. (URI - Snapshot Report) and Hertz Global Holdings, Inc. (HTZ - Snapshot Report).

In Oct 2011, the company acquired Avis Europe plc for 635 million pounds or $1.0 billion. After 25 years, the company successfully united the 2 businesses again. This acquisition has given Avis Budget the opportunity to expand in international markets such as India and China.

Conclusion

We believe that Avis Budget will greatly benefit from the acquisition of Payless. The acquisition will help containing costs from lesser vehicle depreciation, lower fleet interest expense and administrative cost synergies. Moreover, this transaction is likely to provide lucrative returns on investment.

Avis Budget currently carries a Zacks Rank #4 (Sell). Other well performing stocks in the same sector that are worth a look include National Research Corp. (NRCIB - Snapshot Report) with a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%