Car rental stocks experienced significant gains on Thursday, with Hertz Global Holdings (HTZ) reporting a 9% increase in share price following a surge in website traffic as travelers seek alternatives to flying due to ongoing TSA shortages causing lengthy airport security lines across the U.S. Avis Budget Group’s (CAR) stock rose by 13% as well. The TSA staffing issues stem from a lapse in federal funding at the U.S. Department of Homeland Security, which has resulted in TSA officers going unpaid, prompting many to quit or call in sick.
Hertz’s annual sales are projected to rise over 4% in fiscal years 2026 and 2027, nearing $9 billion, while Avis’s sales are expected to grow only 1% and 2% during the same periods, reaching about $12 billion. Recent EPS revisions for Avis have dropped significantly, leading to a Zacks Rank #5 (Strong Sell), whereas Hertz has a rank of #3 (Hold), indicating potential for growth amid the current market conditions.
Investors are advised to consider the cyclicality of car rental operators, especially with warmer travel seasons approaching, as Hertz appears to present a more favorable risk-to-reward scenario compared to Avis.
