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Avis (CAR) to Report Q3 Earnings: A Beat in the Cards?
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We expect leading global car rental company, Avis Budget Group Inc. (CAR - Free Report) to beat expectations when it reports third-quarter 2016 results after the market closes on Nov 2.
Last quarter, the company reported a negative surprise of 14.9%. In fact, the bottom line has underperformed the Zacks Consensus Estimate by an average of 42.5% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Our proven model shows that Avis Budget may beat earnings because it has the right combination of the two key components.
Zacks ESP: Avis Budget currently has an Earnings ESP of +0.85%. This is because the Most Accurate estimate stands at $2.38, while the Zacks Consensus Estimate is pegged lower at $2.36. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Avis Budget carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Avis Budget’s Zacks Rank #3 and positive ESP makes us reasonably confident of a positive earnings beat.
What's Driving the Better-than-Expected Earnings?
Though Avis Budget’s recent surprise history is not very encouraging, we believe the company remains poised to grow as its expansion strategy has been moving in full swing via alliances, acquisitions and joint ventures. Additionally, we commend Avis’ focus on expanding its Budget brand, taking its multi-brand strategy to the next level. Further, sustained productivity growth, several pricing initiatives and potential revenue-generating synergies from its acquisitions bode well.
However, hurdles like unfavorable pricing and high fleet costs have been weighing upon its results and remain a threat to its ongoing performance. Moreover, the company’s significant presence in the international market exposes it to foreign currency headwinds.
Nevertheless, in its last quarter release, Avis’ management revealed that the company began the third quarter on a positive note, with pricing improving in Americas and fleet costs coming in line with expectations. Taking into account these factors and the anticipated benefits from Avis Now, the company raised the lower end of its earnings and EBITDA outlook for 2016. This keeps us optimistic of the company’s performance in the upcoming quarter.
Other Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Hibbett Sports Inc. (HIBB - Free Report) , expected to report earnings on Nov 18, currently has an Earnings ESP of +4.00% and a Zacks Rank #2 (Buy).
Burlington Stores Inc. (BURL - Free Report) , expected to report earnings on Nov 22, currently has an Earnings ESP of +3.03% and a Zacks Rank #2.
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Avis (CAR) to Report Q3 Earnings: A Beat in the Cards?
We expect leading global car rental company, Avis Budget Group Inc. (CAR - Free Report) to beat expectations when it reports third-quarter 2016 results after the market closes on Nov 2.
Last quarter, the company reported a negative surprise of 14.9%. In fact, the bottom line has underperformed the Zacks Consensus Estimate by an average of 42.5% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
AVIS BUDGET GRP Price and EPS Surprise
AVIS BUDGET GRP Price and EPS Surprise | AVIS BUDGET GRP Quote
Why a Likely Positive Surprise?
Our proven model shows that Avis Budget may beat earnings because it has the right combination of the two key components.
Zacks ESP: Avis Budget currently has an Earnings ESP of +0.85%. This is because the Most Accurate estimate stands at $2.38, while the Zacks Consensus Estimate is pegged lower at $2.36. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Avis Budget carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Avis Budget’s Zacks Rank #3 and positive ESP makes us reasonably confident of a positive earnings beat.
What's Driving the Better-than-Expected Earnings?
Though Avis Budget’s recent surprise history is not very encouraging, we believe the company remains poised to grow as its expansion strategy has been moving in full swing via alliances, acquisitions and joint ventures. Additionally, we commend Avis’ focus on expanding its Budget brand, taking its multi-brand strategy to the next level. Further, sustained productivity growth, several pricing initiatives and potential revenue-generating synergies from its acquisitions bode well.
However, hurdles like unfavorable pricing and high fleet costs have been weighing upon its results and remain a threat to its ongoing performance. Moreover, the company’s significant presence in the international market exposes it to foreign currency headwinds.
Nevertheless, in its last quarter release, Avis’ management revealed that the company began the third quarter on a positive note, with pricing improving in Americas and fleet costs coming in line with expectations. Taking into account these factors and the anticipated benefits from Avis Now, the company raised the lower end of its earnings and EBITDA outlook for 2016. This keeps us optimistic of the company’s performance in the upcoming quarter.
Other Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Avon Products Inc. , scheduled to report earnings on Nov 3, currently has an Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hibbett Sports Inc. (HIBB - Free Report) , expected to report earnings on Nov 18, currently has an Earnings ESP of +4.00% and a Zacks Rank #2 (Buy).
Burlington Stores Inc. (BURL - Free Report) , expected to report earnings on Nov 22, currently has an Earnings ESP of +3.03% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>