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Why Avis Budget (CAR) Stock is Down 4% Since Q3 Earnings

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Shares of Avis Budget Group, Inc. (CAR - Free Report) have declined 3.9% since its third-quarter 2019 earnings release on Oct 31. The decline can be attributed to the company’s lower-than-expected earnings and revenue performance and revised guidance. The company reduced the full-year guidance for revenues and lowered the higher end of its adjusted EBITDA view.

 

Notably, the company reported adjusted earnings per share of $2.96, which lagged the Zacks Consensus Estimate by 69 cents and decreased 11.1% year over year. Total revenues of $2.75 billion missed the consensus estimate by $91.9 million and decreased 0.9% year over year due to 1% decline in revenues per day partially offset by a 2% increase in rental days.

Full-year revenues are now anticipated in the range of $9.00-$9.20 billion compared with the prior guided range of $9.20-$9.50 billion. Adjusted EBITDA for 2019 is now expected in the range of $750-$800 million compared with the previously guided range of $750-$850 million.

Per-unit fleet costs increased 6% year over year and utilization improved 20 basis points.

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

 

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

Avis Budget Group, Inc. price-consensus-eps-surprise-chart | Avis Budget Group, Inc. Quote

Let’s check out the quarterly numbers in detail.

Revenues by Segment

Americas segment revenues of $1.87 billion increased 1% year over year owing to 3% growth in rental days, partially offset by 2% decrease in revenues per day. Per-unit fleet costs improved 9%, with utilization improving 30 basis points. The segment accounted for 68% of total revenues.

International segment revenues of $885 million went down 5% year over year due to 1% decrease in rental days. Per-unit fleet costs grew 1%, excluding exchange rate effects, and utilization was flat. The segment contributed 32% to total revenues.

Profitability

Adjusted EBITDA of $471 million declined 1% year over year. Adjusted EBITDA margin of 17.1% was flat year over year.

Adjusted EBITDA for Americas was $321 million compared with $313 million in the prior-year quarter. Internationally, adjusted EBITDA came in at $169 million compared with $178 million in the prior-year quarter.

Balance Sheet and Cash Flow

Avis Budget exited third-quarter 2019 with cash and cash equivalents of $615 million compared with $534 million at the end of the prior quarter. Corporate debt was $3.48 billion compared with $3.54 billion at the end of the prior quarter.

The company generated $966 million of cash from operating activities in the reported quarter. Adjusted free cash flow totaled $57 million and capital expenditures were $61 million.

The company repurchased roughly 2.1 million shares for a total of $59 million during the reported quarter.

2019 Guidance

Avis Budget reaffirmed its 2019 guidance for adjusted earnings, adjusted net income, adjusted pretax income and adjusted free cash flow.

Adjusted EPS is expected between $3.35 and $4.20. The current Zacks Consensus Estimate of $4.01 lies within the guided range.

Further, adjusted net income is projected in the range of $260-$320 million. Adjusted pretax income is expected between $350 million and $450 million. Adjusted free cash flow is expected between $250 million and $300 million.

Zacks Rank & Upcoming Releases

Avis Budget currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Fiserv , ICF International (ICFI - Free Report) and FLEETCOR Technologies , each scheduled to release results on Nov 6.

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