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Why Is Avis Budget (CAR) Down 23.1% Since Last Earnings Report?

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  • CAR

It has been about a month since the last earnings report for Avis Budget Group (CAR). Shares have lost about 23.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

Avis Budget Surpasses Q3 Earnings & Revenues Estimates

Avis Budget reported solid third-quarter 2021 results wherein earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $10.74 per share beat the Zacks Consensus Estimate by 55.7% and the year-ago quarter’s figure by more than 100%. Total revenues of $3 billion surpassed the consensus estimate by 7.4% and improved 96% year over year. The top line was backed by increased revenues per day and rise in rental days.

Revenues by Segment

Americas segment revenues of $2.40 billion were up more than 100% year over year. The segment contributed 80% of total revenues.

International segment revenues of $598 million were up 42% year over year. The segment contributed 20% of total revenues.

Profitability

Adjusted EBITDA was at $1.06 billion, up more than 100% year over year. Adjusted EBITDA margin was 35.2% compared with 14.3% in the year-ago quarter.

Adjusted EBITDA for Americas was $952 million, up more than 100% year over year. The uptick was backed by strong pricing and sustained cost discipline.

Internationally, adjusted EBITDA was $128 million, up more than 100% year over year. The uptick was backed by pricing and solid cost-reduction efforts to meet demand as volume recovery continues.

Balance Sheet and Cash Flow

Avis Budget exited third-quarter 2021 with cash and cash equivalents of $886 million compared with $1.32 billion at the end of the prior quarter. Corporate debt was $4.03 billion compared with $4.29 billion at the end of the prior quarter.

The company generated $1.29 billion of net cash from operating activities in the reported quarter. Adjusted free cash outflow was $816 million and capital expenditures were $27 million in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 70.17% due to these changes.

VGM Scores

Currently, Avis Budget has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Avis Budget has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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