Shares of Hertz Global Holdings, Inc. (HTZ - Free Report) lost 11.83% on Jun 26 to close the session at $16.84 per share. The decline can be attributed to a Bloomberg report, which stated that Morgan Stanley analysts have painted a grim picture for the car rental industry in the United States.
In fact, the damage was not limited to Hertz Global. Shares of another major player in the rental car industry — Avis Budget Group, Inc. (CAR - Free Report) — also declined 9.65% to $34.93 on Jun 26. Per Morgan Stanley, rental-car companies will consistently suffer from pricing pressure apart from intense competition from the likes of Uber Technologies. Moreover, the the firm assessed that companies like Hertz are likely to struggle to increase prices by the requisite amount for offsetting the depreciation expenses associated with their fleets.
Lackluster Price Performance
We note that the Hertz Global stock has performed disappointingly even before the bleak outlook pertaining to used-car pricing went public. So far this year, the stock has declined 24.1% against the industry’s 2.2% increase.
Headwinds like pricing pressure, intense competition, high costs due to significant investments by Hertz Global in its turnaround plan and high debt levels have contributed to investors’ pessimism surrounding the stock.
In fact, the negative sentiment surrounding the stock can be gauged from the Zacks Consensus Estimate for current-year loss, which has widened significantly over the last 60 days. Undoubtedly, the above negatives substantiate Hertz Global’s Zacks Rank #4 (Sell).
Stocks to Consider
Investors interested in the broader Transportation sector may consider better-ranked stocks like Expeditors International of Washington, Inc. (EXPD - Free Report) and Aircastle Limited (AYR - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Expeditors and Aircastle have gained in excess of 17% and 5%, respectively, over the past three months.
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