Sustained focus on productivity and cost containment initiatives, along with better travel trends and lower fleet costs drove Avis Budget Group, Inc. (CAR) to post better-than-expected first-quarter 2012 results. The quarterly earnings of $0.12 per share increased over 9% from the prior-year quarter, beating the Zacks Consensus Estimate of a loss of $0.07.
Buoyed by improved quarterly results, the company expects fiscal 2012 earnings in the range of $2.35 to $2.65 per share, an increase of 42% - 61% from the previous fiscal year. We believe Avis Budget's strong focus on cost reductions will help the company to achieve its goal of higher operating margins. Moreover, the new sales force in the European region is expected to further augment its fiscal 2012 revenue.
Avis Budget's continuous effort of introducing new ideas and investments in technology upgrades will likely boost the company's performance. Currently, we are maintaining a long-term Outperform recommendation on the stock. Our target price of $16.00, 6.5x 2012 EPS, reflects this view.