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Avis Budget's (CAR) Record Revenues Drive Q3 Earnings Beat

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Avis Budget Group Inc. (CAR - Free Report) reported record third-quarter 2017 results with adjusted earnings of $260 million or $3.10 per share compared with $227 million or $2.47 per share in the prior-year quarter. Adjusted earnings comfortably beat the Zacks Consensus Estimate of $2.97.

GAAP earnings for the quarter were $245 million or $2.91 per share compared with $209 million or $2.28 per share in the year-ago quarter, primarily driven by all-time high revenues.

Revenues for the reported quarter were $2,752 million compared with $2,656 million in the year-ago quarter. The year-over-year increase was largely attributable to pricing and utilization improvement in the Americas, strong volume growth and stringent cost-cutting initiatives. However, revenues missed the Zacks Consensus Estimate of $2,776 million.

Avis Budget Group, Inc. Price, Consensus and EPS Surprise

 

Avis Budget Group, Inc. Price, Consensus and EPS Surprise | Avis Budget Group, Inc. Quote

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $482 million compared with $469 million in the year-ago quarter, driven by higher per-unit fleet costs in both its segments.

Segmental Performance

Americas reported revenues of $1,839 million compared with $1,821 in the prior-year quarter, primarily due to 2% increase in time and mileage revenue per day.  Per-unit fleet costs increased 5% to $326.

The International segment’s revenues were up 9% year over year to $913 million, due to 6% benefit from FranceCars which was acquired in December 2016.

Financials

Avis ended the quarter with cash and cash equivalents of $814 million. For the first nine months of 2017, the company generated $2,041 million as cash flow from operating activities. It reported adjusted free cash flow of $473 million during the same period. Avis repurchased 783,000 shares worth $27 million during the quarter, bringing the year-to-date tally to 4.2 million shares for $127 million.

Guidance

The company updated its guidance for full-year 2017. It expects revenues to be in the range of $8,800 million to $8,900 million. In the Americas segment, per-unit fleet costs are expected to be up 6.5-7%. Adjusted EBITDA is expected to be in the range of $725 million to $745 million.

Adjusted earnings per share are expected between $2.45 and $2.65, narrowed from the earlier expectation of $2.40-$2.85. The company expects to repurchase $200 million worth of shares in 2017.

Avis currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include SGS SA (SGSOY - Free Report) , Core-Mark Holding Company, Inc. (CORE - Free Report) and SPS Commerce, Inc. (SPSC - Free Report) , each carrying Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SGS SA has a long-term earnings growth expectation of 6%.

Core-Mark has a long-term earnings growth expectation of 10%.  

SPS Commerce has a long-term earnings growth expectation of 25%. It has beaten earnings estimates in each of the trailing four quarters with a positive surprise of 18.8%.

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