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Why Is Avis Budget (CAR) Down 80.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Avis Budget Group (CAR - Free Report) . Shares have lost about 80.8% in that time frame, underperforming the S&P 500.

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

Avis Budget Q4 Earnings Beat Estimates

Avis Budget Group reported solid fourth-quarter 2019 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of 73 cents beat the Zacks Consensus Estimate by 52% and increased 38% year over year. Total revenues of $2.16 billion outpaced the consensus estimate by 3% and improved 5.5% year over year due to 5% increase in rental days and a 1% increase in revenues per day. Per-unit fleet costs increased 3% year over year and utilization improved 100 basis points.

Revenues by Segment

Americassegment revenues of $1.53 billion increased 9% year over year. The segment accounted for 71% of total revenues. Internationalsegment revenues of $632 million went down 2% year over year. The segment contributed 29% to total revenues.

Profitability

Adjusted EBITDA of $143 million improved 1% year over year. Adjusted EBITDA margin was 6.6% compared with 6.9% in the year-ago quarter. Adjusted EBITDA for Americas was $144 million (up 17% year over year), driven by 8% rental day growth and improved vehicle costs.Internationally, adjusted EBITDA came in at $16 million, down 54% from the prior-year quarter.

Balance Sheet and Cash Flow

Avis Budget exited fourth-quarter 2019 with cash and cash equivalents of $686 million compared with $615 million at the end of the prior quarter. Corporate debt was $3.44 billion compared with $3.48 billion at the end of the prior quarter. The company generated $655 million of cash from operating activities in the reported quarter. Adjusted free cash flow totaled$161 million and capital expenditures were $72 million. The company repurchased roughly 2.2 million shares for a total of $62 million in 2019.

2020 Guidance

Revenues are anticipated in the range of $9.4-$9.6 billion.Adjusted EPS is expected between $3.75 and $4.75. Further, adjusted net income is projected in the range of $250-$350 million. Adjusted pretax income is expected between $375 million and $475 million. Adjusted EBITDA is anticipated in the range of $750-$850 million. Adjusted free cash flow is expected between $275 million and $325 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Avis Budget has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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

Avis Budget has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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