It has been about a month since the last earnings report for Hertz (HTZ Quick QuoteHTZ - Free Report) . Shares have added about 44.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hertz due for a pullback? 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 drivers.

Hertz Global Incurs Loss in Q1

Hertz Global incurred a loss of $1.78 per share in the first quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $1.06. Moreover, the amount of loss increased year over year. Results were significantly affected by decreased demand for rental cars amid coronavirus concerns.

Quarterly revenues of $1,923 million also missed the Zacks Consensus Estimate of $2,029 million. Moreover, the top line declined 8.7% year over year due to weak performance by the U.S. and International Rental Car segments.

Segmental Performance

In the quarter under review, the U.S. Rental Car segment generated revenues of $1,381 million, down 9% year over year. This downside was caused by a decline in transaction days as a result of a dramatic drop in March volumes amid coronavirus-led travel bans and shelter-in-place orders across the United States.

Vehicle utilization declined to 67% from 79% a year ago. Transaction days fell 11% year over year. Total revenue per transaction day (RPD) increased 2%. Adjusted EBITDA for the segment was ($199 million) in the first quarter against $7 million a year ago.

Segmental direct vehicle and operating expenses dropped slightly to $969 million. Meanwhile, interest expenses jumped 21.9%. However, selling, general and administrative expenses declined 4.9% year over year.

The International Rental Car segment generated revenues of $368 million, down 15% year over year due to decreased volumes in March. Segmental revenues fell 12% on a constant-currency basis. Vehicle utilization fell to 66% from 74% in the year-ago quarter. Segmental RPD was flat year over year.

Segmental direct vehicle and operating costs declined 6.7% year over year to $265 million. While interest expenses contracted 9.1%, selling, general and administrative expenses fell 11.1% year over year. Adjusted EBITDA for the segment came in at a loss of $45 million compared with a loss of $13 million in the first quarter of 2019. Meanwhile, revenues from all other operations climbed 13% to $174 million.

Balance Sheet Highlights

The company exited the first quarter with cash and cash equivalents of $1,017 million compared with $865 million at the end of 2019. Restricted cash and cash equivalents at the end of the period came in at $392 million compared with $495 million at 2019-end. As of Mar 31, 2020, total debt amounted to $18.75 billion compared with $17.09 billion as of Dec 31, 2019.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -88.73% due to these changes.

VGM Scores

At this time, Hertz has an average Growth Score of C, a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hertz has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.