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Reasons to Retain Avis Budget (CAR) Stock in Your Portfolio
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Avis Budget Group, Inc. (CAR - Free Report) shares have gained 41.6% over the past six months, significantly outperforming the 23.1% rally of the industry it belongs to.
What’s Behind the Rally?
Avis Budget operates through distinct global brands that focus on different market segments and complement other brands in their respective regional markets. The company’s ability to cater to a wide range of mobility demands helps it expand and strengthen its global foothold through organic growth.
Avis Budget remains focused on expanding its connected vehicles fleet, having crossed the 200,000 connected cars mark in 2019. Expansion of connected cars fleet allows streamlining of operations and cost reduction. It enables enhanced tracking of idle vehicles and automated processing of cars ready to rent. Also, it facilitates real-time inventory counts, mileage management and automated maintenance notification.
Moreover, the massive data generated by these vehicles related to road conditions, accident-prone zones, location mapping, weather report as well as user preferences during the driving will actually be a much-prized resource for the company, which it can monetize later.
Avis Budget has an impressive track record of share repurchases. In 2019, the company repurchased 2.2 million shares at a cost of $62 million. In 2018, 2017 and 2016, the company bought back shares worth $200 million, $210 million and $398 million, respectively. Such moves underline the company’s confidence in business and help instill investors’ confidence in the stock by positively impacting earnings per share.
Some Risks
Avis Budget's debt-to-capitalization ratio of 1.00 was significantly higher than the industry's 0.71 at the end of the third quarter of 2020. A high debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is high and so is the risk of insolvency.
Further, cash and cash equivalent balance of $1.6 billion at the end of the quarter was well below the long-term debt level of $12.5 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $19 million.
Zacks Rank and Stocks to Consider
Avis Budgetcurrently carries a Zacks Rank #3 (Hold).
The long-term expected earnings per share (three to five years) growth rate for Gartner, Automatic Data Processing and Insperity is 13.5%, 12% and 15%, respectively.
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Reasons to Retain Avis Budget (CAR) Stock in Your Portfolio
Avis Budget Group, Inc. (CAR - Free Report) shares have gained 41.6% over the past six months, significantly outperforming the 23.1% rally of the industry it belongs to.
What’s Behind the Rally?
Avis Budget operates through distinct global brands that focus on different market segments and complement other brands in their respective regional markets. The company’s ability to cater to a wide range of mobility demands helps it expand and strengthen its global foothold through organic growth.
Avis Budget remains focused on expanding its connected vehicles fleet, having crossed the 200,000 connected cars mark in 2019. Expansion of connected cars fleet allows streamlining of operations and cost reduction. It enables enhanced tracking of idle vehicles and automated processing of cars ready to rent. Also, it facilitates real-time inventory counts, mileage management and automated maintenance notification.
Moreover, the massive data generated by these vehicles related to road conditions, accident-prone zones, location mapping, weather report as well as user preferences during the driving will actually be a much-prized resource for the company, which it can monetize later.
Avis Budget has an impressive track record of share repurchases. In 2019, the company repurchased 2.2 million shares at a cost of $62 million. In 2018, 2017 and 2016, the company bought back shares worth $200 million, $210 million and $398 million, respectively. Such moves underline the company’s confidence in business and help instill investors’ confidence in the stock by positively impacting earnings per share.
Some Risks
Avis Budget's debt-to-capitalization ratio of 1.00 was significantly higher than the industry's 0.71 at the end of the third quarter of 2020. A high debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is high and so is the risk of insolvency.
Further, cash and cash equivalent balance of $1.6 billion at the end of the quarter was well below the long-term debt level of $12.5 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $19 million.
Zacks Rank and Stocks to Consider
Avis Budgetcurrently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Gartner, Inc. (IT - Free Report) , Automatic Data Processing (ADP - Free Report) and Insperity (NSP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for Gartner, Automatic Data Processing and Insperity is 13.5%, 12% and 15%, respectively.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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