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Avis Budget Remains Poised for Healthy Inorganic Growth
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On Jan 18, 2017, Zacks Investment Research updated the research report on Avis Budget Group, Inc. (CAR - Free Report) .
Avis Budget provides vehicle rental services through a network of approximately 10,000 car and truck rental locations in the U.S., Canada, Australia, New Zealand, Latin America, the Caribbean, and parts of Asia. The company was founded in 1946 under the name Cendant Corp., which was later changed to Avis Budget Group in 2006, after a spin-off. The New Jersey-based company offers car rental services to the commercial and leisure segments of the travel industry under the Avis brand, as well as to the price-conscious car rental segment under the Budget brand. Avis Budget also offers truck rentals and related services to consumers and light commercial users under the Budget truck brand.
Avis Budget outperformed the Zacks categorized Business - Services industry with an average return of 12.8% against a decline of 4.5% for the latter, over a period of 90 days. This outperformance was due to the continued digital investments that the company is making.
Avis Budget’s expansion strategy has been in full swing via alliances, acquisitions and joint ventures. On Dec 20, 2016, the company completed the acquisition of France Cars to augment its presence in the French market. A privately-held car-rental company, France Cars makes nearly €60 million in vehicle rental revenues on an annual basis. Notably, the buyout of this France-based company will add roughly 8,000 cars, vans and light trucks to Avis’ existing fleet, thus providing it the edge of having France’s second-largest fleet of light commercial vehicles.
Looking at the recent series of events, it seems that Avis Budget intends to aggressively increase the number of company-operated locations in fast-growing markets. The company has been focused on expanding its Budget brand, taking its multi-brand strategy to the next level. In line with this strategy, the company is in the process of acquiring its Budget Car Rental licensees at various locations. Some of the recent acts of buying licensees include the 100% acquisition of its Brazilian licensee; acquiring licensee for southern Africa from Barloworld; along with owning the Budget licensee for Southern California and Las Vegas in the U.S., Norway, Sweden and Denmark in Scandinavia, and Edmonton in Alberta, Canada. We believe these moves will facilitate Avis Budget to enhance the Budget brand loyalty through better utilization of the licensee’s established presence, which will ultimately boost its top line.
However, the company continues to face hurdles like high fleet costs and unfavorable currency headwinds. Evidently, the company’s earnings and earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter were hurt by high fleet costs across both segments and adverse currency movements in the International segment.
Avis Budget currently anticipates 2016 sales to grow 3% to $8.75 billion, compared with its prior projection of 3–5% growth to $8.75–$8.9 billion. Further, adjusted EBITDA is now projected to come on the lower end of its previously guided band of $850−$900 million. Finally, the company envisions its adjusted earnings per share to be $2.93, which is close to the lower end of its previously announced range of $2.90–$3.30. Consequently, we have been noticing a downtrend in the Zacks Consensus Estimate for the fourth quarter and full year 2016 in the last 90 days. The company is on track to right-size its fleet to counter the soft demand.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average positive earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Clear Channel Outdoor is global leader in outdoor advertising displays in countries across continents. The company currently has long-term earnings growth expectation of 3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Avis Budget Remains Poised for Healthy Inorganic Growth
On Jan 18, 2017, Zacks Investment Research updated the research report on Avis Budget Group, Inc. (CAR - Free Report) .
Avis Budget provides vehicle rental services through a network of approximately 10,000 car and truck rental locations in the U.S., Canada, Australia, New Zealand, Latin America, the Caribbean, and parts of Asia. The company was founded in 1946 under the name Cendant Corp., which was later changed to Avis Budget Group in 2006, after a spin-off. The New Jersey-based company offers car rental services to the commercial and leisure segments of the travel industry under the Avis brand, as well as to the price-conscious car rental segment under the Budget brand. Avis Budget also offers truck rentals and related services to consumers and light commercial users under the Budget truck brand.
Avis Budget outperformed the Zacks categorized Business - Services industry with an average return of 12.8% against a decline of 4.5% for the latter, over a period of 90 days. This outperformance was due to the continued digital investments that the company is making.
Avis Budget’s expansion strategy has been in full swing via alliances, acquisitions and joint ventures. On Dec 20, 2016, the company completed the acquisition of France Cars to augment its presence in the French market. A privately-held car-rental company, France Cars makes nearly €60 million in vehicle rental revenues on an annual basis. Notably, the buyout of this France-based company will add roughly 8,000 cars, vans and light trucks to Avis’ existing fleet, thus providing it the edge of having France’s second-largest fleet of light commercial vehicles.
Looking at the recent series of events, it seems that Avis Budget intends to aggressively increase the number of company-operated locations in fast-growing markets. The company has been focused on expanding its Budget brand, taking its multi-brand strategy to the next level. In line with this strategy, the company is in the process of acquiring its Budget Car Rental licensees at various locations. Some of the recent acts of buying licensees include the 100% acquisition of its Brazilian licensee; acquiring licensee for southern Africa from Barloworld; along with owning the Budget licensee for Southern California and Las Vegas in the U.S., Norway, Sweden and Denmark in Scandinavia, and Edmonton in Alberta, Canada. We believe these moves will facilitate Avis Budget to enhance the Budget brand loyalty through better utilization of the licensee’s established presence, which will ultimately boost its top line.
However, the company continues to face hurdles like high fleet costs and unfavorable currency headwinds. Evidently, the company’s earnings and earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter were hurt by high fleet costs across both segments and adverse currency movements in the International segment.
Avis Budget currently anticipates 2016 sales to grow 3% to $8.75 billion, compared with its prior projection of 3–5% growth to $8.75–$8.9 billion. Further, adjusted EBITDA is now projected to come on the lower end of its previously guided band of $850−$900 million. Finally, the company envisions its adjusted earnings per share to be $2.93, which is close to the lower end of its previously announced range of $2.90–$3.30. Consequently, we have been noticing a downtrend in the Zacks Consensus Estimate for the fourth quarter and full year 2016 in the last 90 days. The company is on track to right-size its fleet to counter the soft demand.
Avis Budget currently carries a Zacks Rank #3 (Hold). Some better ranked stocks in the industry include NV5 Global, Inc. (NVEE - Free Report) , Gartner, Inc. (IT - Free Report) and Clear Channel Outdoor Holdings, Inc. (CCO - Free Report) , each carrying a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average positive earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Clear Channel Outdoor is global leader in outdoor advertising displays in countries across continents. The company currently has long-term earnings growth expectation of 3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>