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Avis Budget Group, Inc. (CAR - Free Report) missed big in the first quarter as lower used car values and competition from places like Uber hurt. This Zacks Rank #5 (Strong Sell) is only expected to see earnings growth of just 0.7% in 2017.

Avis Budget Group is one of the largest rental car companies in the world, with over 11,000 rental locations in 180 countries. It also owns Zipcar, which has more than one million members.

In full disclosure, I'm a Zipcar member and was curious how that aspect of the business was doing but Avis doesn't bust it out from the rest of the business.

On an anecdotal note, recently, there have been a lot more reminder e-mails sent to me to rent a car again.

For those not familiar, Zipcar is a service in most major US cities where you can rent a car by the hour or day at locations around town. There's no going to a rental car location to get one.

A Big Miss in the First Quarter

On May 3, Avis reported its first quarter results and missed on the Zacks Consensus Estimate by 43 cents. Earnings were a loss of $0.94 versus the consensus for a loss of just $0.51.

Revenue fell 2% to $1.8 billion on higher-than-expected fleet costs, continued pricing pressures and a shift of Easter traffic to the second quarter.

It cut costs by $50 million in order to mitigate the effects of weak vehicle residual values. It saw used-car value begin to improve at the end of the first quarter so it believes that results will be better moving forward.

Estimates Lowered

Avis provided a full year 2017 guidance range of $2.85 to $3.50 but the analysts weren't really buying the high end of that range.

Two estimates were cut in the last week, pushing the Zacks Consensus Estimate down to $2.95 from $3.16. That's at the lower end of the range and is earnings growth of just 0.7%.

Shares Sink in 2017

It's been a tough 2017 as shares have fallen nearly 28% year-to-date.



However, they're also pretty cheap, with a forward P/E of just 9.3.

But with competition brewing from ride share companies like Uber and Lyft, it's hard to see where the growth will come from in the near term.

If I were an investor, I would stay away from this industry for now until there is more stabilization. Competitor Hertz (HTZ - Free Report) is also struggling. It too is a Zacks Rank #5 (Strong Sell).

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