Shares of Hertz Global Holdings Inc. (HTZ - Free Report) surged about 4.5% on Friday, Nov 21, 2014, as the search for the company’s Chief Executive Officer (CEO) came to an end with the appointment of travel and transportation industry veteran, John Tague, as its new CEO and President. John assumed his new positions in the company on Friday.
John was chosen as the CEO of Hertz after an extensive search by the company’s CEO Search Committee with the help of a leading executive search firm, who were looking for a game changer to revive the company’s financial performance. John perfectly fits these criteria having proven his potential with the successful turnaround of United Airlines.
John had played a major role in the turnaround of United Airlines before it merged with Continental Airlines to form an airlines behemoth named United Continental Holdings (UAL - Free Report) . During his role, as the President and Chief Operating Officer (COO) of United Airlines, he introduced innovative product and pricing programs that revived its business and obtained customer satisfaction.
Apart from his popularity as the savior of United Airlines, John has served the travel and transportation industry with demonstrable results in revenue generation, operational excellence and corporate makeover.
Most recently, John held the position of Chairman and CEO at a leading transportation and logistics providing company, Cardinal Logistics Holdings. He had assumed this position in 2013 after the merger of Cardinal Logistics with Greatwide Logistics Services, LLC, where he served as a CEO since 2011.
Given John’s past performance, we believe that he is apt for the position of CEO in a company struggling with accounting issues and weak earnings results over the past few quarters.
Hertz has been under the scanner for quite a while now with its ongoing review of financial statements. Earlier this month, the company announced that it does not expect to file updated financial statements anytime before mid-2015, owing to the accounting errors reported earlier.
Due to the identification of certain errors in the financial results for 2011 earlier this year, this Zacks Rank #5 (Strong Sell) company had stated that its audit committee has directed the initiation of a complete review of its financial results for fiscal years 2011, 2012 and 2013.
Moreover, Hertz provided an update on its third-quarter 2014 results. Total revenue during the quarter inched up 2% year over year to $3.1 billion. Going by segments, revenues at the U.S. Car Rental segment remained flat year over year at $1.8 billion, forming 57% of the total revenue; the International Car Rental segment revenues increased roughly 3% to $795 million, contributing 25% to total revenue; the Worldwide Equipment Rental segment also witnessed a 3% rise in revenues to $415 million, adding 13% to total revenue, and all other operations segment revenues advanced 9% to $145 million, which formed 5% of total revenue.
Hertz also provided an outlook for 2014. Including the effect of the adjustments made with respect to the accounting review, the company envisions its corporate earnings before interest, taxes, depreciation and amortization for 2014 to be in the range of $1.30–$1.45 billion. Also, the company stated that 2014 and 2015 should not be considered as the base for its future results owing to the exceptional costs incurred for the ongoing accounting and financial reviews.
Better-ranked stocks in the business services sector include Core-Mark Holding Company Inc. (CORE - Free Report) and WageWorks Inc. (WAGE - Free Report) , each carrying a Zacks Rank #2 (Buy).