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Hertz (HTZ) Q3 Earnings: Is a Disappointment in Store?

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Hertz Global Holdings, Inc. (HTZ - Free Report) is slated to report third-quarter 2016 results on Nov 7. Last quarter (which marked Hertz’s first earnings as a stand-alone entity), the company delivered a positive earnings surprise of 36.7%. Let’s see how things are shaping up for this announcement.

HERTZ GLBL HLDG Price and EPS Surprise
 

HERTZ GLBL HLDG Price and EPS Surprise | HERTZ GLBL HLDG Quote

Factors Influencing This Quarter

Hertz concluded the separation of its equipment rental business in the last quarter, and is focused on its core car rental operations now. This along with the improved pricing trends in the U.S. bode well. However, there are some factors which cannot be ignored with regard to Hertz’s upcoming release.

Management expects the recent terror attacks in Europe to hurt travel demand and thus, lead to sluggish growth of inbound visitors in the region, which may impact the company’s International performance. Further, Hertz experienced some recalls in the U.S. Rental Car segment in the back half of Jun 2016 that weighed upon its capacity by 1% in the month. Management stated that these trends lingered into July, which in turn is likely to dent Hertz’s July performance. Finally, though the company expects the U.S. pricing trends to improve in the second half of 2016, the growth is expected to be lower than what was anticipated three months ago. Given these factors, we remain apprehensive about Hertz’s upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Hertz is likely to beat earnings this quarter. This is because a stock needs to have both a positive  Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Hertz currently has an Earnings ESP of -6.76%. This is because the Most Accurate estimate of $2.62 stands below the Zacks Consensus Estimate of $2.81. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Hertz carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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:

Michael Kors Holdings Limited (KORS - Free Report) , scheduled to release earnings on Nov 10, has an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cott Corporation (COT - Free Report) , scheduled to release earnings on Nov 10, has an Earnings ESP of +16.67% and a Zacks Rank #3 (Hold).

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.

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