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Hertz Global Files for Bankruptcy Due to Coronavirus Crisis

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Hertz Global Holdings (HTZ - Free Report) recently filed for bankruptcy as its business is being crippled by the coronavirus-induced waning demand for rental hire services with most people staying indoors. Notably, the company failed to meet its May 4 deadline of paying its creditors $500 million roughly, thereby exposing its financial crunch. However, this car-rental company was further granted an extension through May 22 by its lenders.

Nonetheless, following the second payment default by Hertz Global, no new deadline was set. Thus, in turn, prompted the company to file for protection against insolvency. Reportedly, the amount was related to the financing for its fleet of 500,000 rental cars. Notably, the company exited the March quarter with cash and cash equivalents worth $1,409 million whereas its total debt amounted to a staggering $20,598 million. The total debt to total capital ratio for Hertz increased to 0.93 at the end of first-quarter 2020 compared with 0.91 at the end of the fourth quarter of 2019.


Notably, the company’s revenue stream was already hard hit by the COVID-19 pandemic, which resulted in tumbling travel demand and a heavy debt burden.Further compounding its woes was the ongoing management uncertainty that caused frequent reshuffling at its helm over the past few years. The most recent change came on May 18 when Paul Stone replaced Kathryn Marinello as the CEO.

Management at Hertz Global also stated that all its operations are open and fully functional. Hertz Global believes that the move to file for Chapter 11 reorganization will enable it to improve its financial structure.
 

Zacks Rank & Key Picks

Hertz Global carries a Zacks Rank #4 (Sell), currently. Better-ranked stocks in the broader Transportation sector include Teekay Tankers (TNK - Free Report) , Scorpio Tankers (STNG - Free Report) and Martin Midstream Partners (MMLP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Teekay Tankers’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters.

Scorpio Tankers’ bottom line surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in the other two.

Martin Midstream Partners beat on earnings in three of the previous four quarters, lagging estimates on one occasion.

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