Recently, Avis Budget Group, Inc. (CAR - Free Report) entered into a multi-year deal with Costco Travel. As per the deal, more than 45 million Costco Wholesale Corporation (COST - Free Report) members across the U.S. will be provided with savings on vehicle rentals and supplementary products from Avis Car Rental and Budget Car Rental.
Further, the Costco members will continue to enjoy the benefits of booking Avis and Budget reservations through Costco's toll-free member phone number and authorized website. Moreover, Costco’s 450 stores in the U.S. will showcase the car rental brands across email marketing campaigns and in-store signage.
The above-mentioned partnership will expectedly benefit both Avis Budget and Costco Travel. For Avis Budget, the tie-up will facilitate the increase of its customer base and aid in top-line growth as well. For Costco, the deal will help in providing its members high quality services and enhanced savings through Avis Budget.
We see strong U.S. demand for Avis Budget as travel volumes continue to do well. A rise in traveling for both leisure and business purposes and a projection of sustainability of this trend lead us to expect this partnership, along with the earlier acquisition of Avis Europe, to enhance Avis Budget’s operational foothold in the global market.
Avis Budget is a leading provider of vehicle rental services. The company is seeking to boost revenues and hence, aggressively expanding its operations through acquisitions and joint ventures. Some of the company’s recent acquisitions include Payless Car Rental (in Jul 2013) and Zipcar Inc. (in Mar 2013).
However, the prevalent sluggish economic scenario in both Europe and Australia, along with rising fleet costs remains a drag on the Avis Budget’s bottom-line performance. With the company lowering it outlook for fiscal 2013, it now carries a Zacks Rank #5 (Strong Sell). Hence, we would prefer to avoid Avis Budget until there are signs of improvement.
Meanwhile, other stocks that are worth a look include Cardtronics Inc. (CATM - Free Report) and comScore, Inc. . Both carry a Zacks Rank #1 (Strong Buy).