How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Avis Budget Group (
CAR Quick Quote CAR - Free Report) ten years ago? It may not have been easy to hold on to CAR for all that time, but if you did, how much would your investment be worth today? Avis Budget Group's Business In-Depth
With that in mind, let's take a look at Avis Budget Group's main business drivers.
Headquartered in Parsippany, N.J., Avis Budget Group operates as a leading vehicle rental operator in North America, Europe and Australasia with an average rental fleet of nearly 650,000 vehicles. The company is a leading global provider of mobility solutions through its three most recognized brands — Avis, Budget and Zipcar. The company has licensees in approximately 175 countries throughout the world.
Along with its licensees, Avis Budget operates in approximately 180 countries with more than 11,000 car and truck rental locations throughout the world.The company usually maintains a leading share of airport car rental revenue in North America, Europe and Australasia, and operates one of the leading truck rental businesses in the United States. Its Zipcar brand is one of the world’s leading car sharing businesses which provides an alternative to traditional vehicle rental and ownership.
Avis Budget mainly generates revenues from vehicle rental operations. These include time & mileage fees charged to our customers for vehicle rentals; sales of loss damage waivers and insurance and other supplemental items in conjunction with vehicle rentals; and payments from customers with respect to certain operating expenses incurred, including gasoline, vehicle licensing fees and concession fees, which provide the right to operate at airports and other locations. Additionally, the company earns revenues for royalties and associated fees from its licensees in conjunction with their vehicle rental transactions.
The company reports its operating results under two segments:
: This segment (69% of 2020 revenues) consists of vehicle rental operations in North America, South America, Central America and the Caribbean, car sharing operations in certain of these markets, and licensees in the areas in which the company does not operate directly.
: This segment (31%) consists of the company’s vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, car sharing operations in certain of these markets, and licensees in the areas in which the company does not operate directly. As of Dec 31, 2020, Avis Budget employed approximately 30,000 worldwide. Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Avis Budget Group ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in October 2011 would be worth $12,384.74, or a gain of 1,138.47%, as of October 18, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 265.13% and the price of gold went up 1.27% over the same time frame.
Analysts are forecasting more upside for CAR too.
Avis Budget's shares have outperformed its industry in the past year, partly due to earnings and revenue beat in the past two quarters. It's ability to cater to a wide range of mobility demands helps it expand and strengthen global foothold through organic growth. It operates through distinct global brands that focus on different market segments and complement other brands in their respective regional markets. It's fleet expansion and technology enhancement efforts are likely to enhance its offerings. On the flip side, the company faces intense competition from other players in terms of pricing in the vehicle rental industry. The company's rental business experiences seasonal variations. The company has no plan to pay cash dividends on common stock. High debt may limit the company's future expansion and worsen its risk profile.
Over the past four weeks, shares have rallied 58.38%, and there have been 2 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.