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Why Is Avis Budget (CAR) Up 3% Since Last Earnings Report?

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A month has gone by since the last earnings report for Avis Budget Group (CAR - Free Report) . Shares have added about 3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Avis Budget due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Avis Budget Tops Q4 Earnings Estimates, Lags Revenues

Avis Budget reported mixed fourth-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. In response to earnings beat, shares climbed 9.8% in after-hours trading yesterday.

Adjusted earnings per share of 53 cents beat the consensus mark by 22 cents and increased 17.8% year over year. The bottom line benefited from higher Americas pricing and lower per-unit fleet costs.

Revenues of $2.05 billion fell short of the consensus estimate by $10 million but increased 1.5% year over year. The company reported top-line growth for the ninth consecutive year. The top line was driven by a 3% increase in volume and strength across Americas pricing, which was, however, partially offset by a $32 million effect from currency exchange movements and soft International performance.

Revenues by Segment

Americas segment revenues of $1.40 billion increased 1.6% year over year on the back of higher commercial and leisure pricing. The segment accounted for 68% of total revenues.

Revenues at the International segment were up 1.4% year over year to $646 million. The upside was driven by higher volume, partially offset by pressure on pricing and $28 million impact from currency exchange. The segment contributed 32% to total revenues.

Profitability

Adjusted EBITDA of $142 million rose 1.4% from the prior-year quarter, with adjusted EBITDA margin of 6.9% remaining flat year over year.

Adjusted EBITDA for Americas was $123 million, up 14.9% from prior-year quarter. Adjusted EBITDA for International declined 22.2% year over year to $35 million. The decline, resulting from lower pricing and $3 million impact from currency exchange movements, was partially offset by increased volume, strong cost controls and increased utilization.

Balance Sheet and Cash Flow

Avis Budget exited fourth-quarter 2018 with cash and cash equivalents of $615 million compared with $605 million at the end of the prior quarter. Corporate debt at the end of the reported quarter was $3.6 billion, roughly flat sequentially.

The company generated $514 million of cash from operating activities in the reported quarter. Adjusted free cash flow totaled $141 million andcapital expenditures were $74 million.

The company repurchased 2.5 million shares for $71 million in the fourth quarter.

2019 Outlook

Avis Budget unveiled its guidance for 2019. Adjusted EPS is expected between $3.35 and $4.20. The company expects revenues to be in the range of $9.20-$9.50 billion.

Further, adjusted net income is projected in the range of $260-$320 million. Adjusted pretax income is expected between $350 million and $450 million. Adjusted EBITDA is anticipated in the range of $750-$850 million. Adjusted free cash flow is expected between $250 million and $300 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.


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