Avis Budget’s Earnings Forecast Dims as Stock Takes a Hit
Avis Budget Group, Inc.’s (CAR) earnings outlook for 2024 has dropped significantly, with the latest EPS estimates falling short of an already negative consensus.
The car rental giant has seen its stock price decrease by 60% over the past two years, raising concerns for potential investors.
Avis Budget Overview
Avis Budget operates about 10,250 rental locations across 180 countries under its well-known brands, Avis and Budget. Most of its operations are concentrated in North America, Europe, and Australasia, while it also works with licensees in other regions.
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In addition to its main brands, CAR owns Zipcar, which ranks as one of the largest car-sharing services worldwide.
The car rental industry remains highly competitive, featuring strong price and service rivalry among companies like Enterprise Holdings, Inc. (Enterprise, National, and Alamo brands) and Hertz Global Holdings, Inc. (HTZ) (Hertz, Dollar, and Thrifty brands).
In 2023, Avis Budget’s total expenses surged 20.8% compared to the previous year, and estimates suggest a further 15.6% rise in 2024. High fleet costs have driven these expenses, with monthly per-unit fleet costs up 104% year-over-year during the first half of 2024 (131% increase in the Americas region).
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In a concerning trend, Avis Budget fell short of adjusted Q2 earnings per share estimates by 84% year-over-year.
According to Zacks, CAR’s adjusted EPS is forecasted to drop by 83% in 2024, decreasing from $42.08 per share last year to just $7.15 per share. The company’s earnings fell 26% in 2023, and its most current FY24 EPS estimate is 30% below consensus—standing at $5.02 per share against expectations of $7.15.
Caution Advised for CAR Stock
Additionally, the latest estimates for FY25 indicate earnings are predicted to be 25% below consensus. These downward adjustments have resulted in a Zacks Rank of #5 (Strong Sell) for Avis Budget.
The stock has lost 60% of its value in the past two years, erasing a substantial portion of its gains from the post-Covid recovery. Currently, CAR’s price remains well beneath its 200-week moving average, and it has recently dropped below the 50-day moving average as well.
It may be prudent for investors to avoid purchasing Avis Budget stock until a clearer improvement in its earnings outlook is demonstrated.
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