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Hertz (HTZ) Down 14.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Hertz (HTZ - Free Report) . Shares have lost about 14.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hertz due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Narrower-Than-Expected Loss at Hertz Global in Q1

Hertz Global's adjusted loss of 99 cents per share was narrower than the Zacks Consensus Estimate of a loss of $1.32. Moreover, the amount of loss decreased on a year-over-year basis. Solid pricing, volume growth and efficient fleet management benefited results.

Quarterly revenues came in at $2.11 billion, missing the Zacks Consensus Estimate of $2.17 billion. However, the top line improved 2.1% on impressive performance of the U.S. Rental Car segment.

Segmental Performance

In the quarter under review, the U.S. Rental Car segment generated revenues of $1.52 billion, up 7% year over year. This upside can be attributed to expanded volumes and favorable pricing.

Vehicle utilization remained flat at 79% in the quarter. In first-quarter 2019, direct vehicle operating and selling, general and administrative costs (as a percentage of total segmental revenues) increased 20 basis points to 72% in the reported quarter.

The International Rental Car segment generated revenues of $433 million, down 7% year over year. Segmental revenues were flat excluding foreign currency impact. Total revenue per transaction day (RPD) dipped 2% to $42.56 million.

Segmental direct vehicle operating and selling, general and administrative costs (as a percentage of total segmental revenues) rose to 78% from 77% a year ago. Revenues from all other operations dropped 9% to $154 million.
 

Balance Sheet and Cash Flow
 

Hertz Global exited the quarter with cash and cash equivalents of $554 million compared with $1.13 billion at the end of 2018. Restricted cashat the end of the quarter totaled $452 million compared with $283 million at the end of 2018.

As of Mar 31, 2019, total debt amounted to $17.26 billion compared with $16.32 billion as of Dec 31, 2018. Cash flows provided by operating activities during the first quarter totaled $514 million compared with $401 million in the prior-year period.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -25% due to these changes.

VGM Scores

At this time, Hertz has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Hertz has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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