We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies. In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chase the Rebound in Avis (CAR) Stock Amid Trump's Auto Tariff Boost?
Read MoreHide Full Article
Avis Budget Group (CAR - Free Report) shares have risen more than +20% over the last week as President Trump’s 25% tariffs on all imported vehicles are likely to boost the fleet value for the leading rental car operator.
The implied pricing leverage Avis will have for its rental car services has also led to positive investor sentiment.
Known for its massive earnings potential, let’s see if the rebound in Avis stock can continue or if it’s time to fade the recent rally.
CAR Performance Overview
Despite a sharp rebound off its 52-week lows of $54 a share in March, Avis stock is still 43% from its one-year peak of over $130 last May. Seeing as rental car operations tend to be cyclical based on seasonal demand, a string of three consecutive quarterly earnings misses had led to the sharp decline in CAR shares which is illustrated by the red arrows in the Price, Consensus and EPS surprise chart below.
Although Avis has missed bottom-line expectations in three of its last four quarterly reports, the company most recently surpassed Q4 EPS estimates in February, posting an adjusted loss of -$0.23 a share compared to estimates of -$0.96.
Image Source: Zacks Investment Research
Monitoring Avis’s Outlook
Reassuringly, Avis's annual earnings are expected to rebound and soar to $8.84 per share this year, versus EPS of $3.74 in fiscal 2024. This comes as Avis had a one-time non-cash impairment of $2.3 billion last year and additional non-cash charges of $180 million which was attributed to a strategic decision to accelerate its fleet rotations by purchasing new vehicles.
The move is aimed at improving long-term operational efficiency and reducing fleet costs in the future with Avis’s EPS projected to soar another 63% in FY26 to $14.47. However, it’s noteworthy that FY25 and FY26 EPS estimates have declined over the last 60 days.
Image Source: Zacks Investment Research
On the top line, Avis’s total sales are currently slated to rise 1% in FY25 and are projected to increase another 2% in FY26 to $12.2 Billion.
Image Source: Zacks Investment Research
CAR Valuation Comparison
At current levels, CAR trades at just 8.7X forward earnings. This is a significant discount to its Zacks Transportation-Services Industry average of 16.5X with some of the other notable companies in the space being C.H. Robinson Worldwide (CHRW - Free Report) , REV Group (REVG - Free Report) , and Hertz Global (HTZ - Free Report) .
It’s noteworthy that Hertz isn’t profitable so P/E valuation can’t be used in comparison to its rental car competitor. That said, like Hertz, Avis trades at less than 1X sales which is on par with the industry average.
Image Source: Zacks Investment Research
Conclusion & Strategical Thoughts
Undoubtedly, Avis stock is attractive to long-term investors under $100 a share but there could be better buying opportunities ahead. To that point, if EPS estimates continue to decline it may be time to fade the recent rally as this could likely lead to more downside risk in CAR shares and a sell rating despite Avis's attractive valuation.
That said, an uptick in EPS revisions could lead to a buy rating and is plausible if imported vehicle tariffs start to show a positive impact on the company’s operations and fleet value. For now, Avis stock lands a Zacks Rank #3 (Hold).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Chase the Rebound in Avis (CAR) Stock Amid Trump's Auto Tariff Boost?
Avis Budget Group (CAR - Free Report) shares have risen more than +20% over the last week as President Trump’s 25% tariffs on all imported vehicles are likely to boost the fleet value for the leading rental car operator.
The implied pricing leverage Avis will have for its rental car services has also led to positive investor sentiment.
Known for its massive earnings potential, let’s see if the rebound in Avis stock can continue or if it’s time to fade the recent rally.
CAR Performance Overview
Despite a sharp rebound off its 52-week lows of $54 a share in March, Avis stock is still 43% from its one-year peak of over $130 last May. Seeing as rental car operations tend to be cyclical based on seasonal demand, a string of three consecutive quarterly earnings misses had led to the sharp decline in CAR shares which is illustrated by the red arrows in the Price, Consensus and EPS surprise chart below.
Although Avis has missed bottom-line expectations in three of its last four quarterly reports, the company most recently surpassed Q4 EPS estimates in February, posting an adjusted loss of -$0.23 a share compared to estimates of -$0.96.
Image Source: Zacks Investment Research
Monitoring Avis’s Outlook
Reassuringly, Avis's annual earnings are expected to rebound and soar to $8.84 per share this year, versus EPS of $3.74 in fiscal 2024. This comes as Avis had a one-time non-cash impairment of $2.3 billion last year and additional non-cash charges of $180 million which was attributed to a strategic decision to accelerate its fleet rotations by purchasing new vehicles.
The move is aimed at improving long-term operational efficiency and reducing fleet costs in the future with Avis’s EPS projected to soar another 63% in FY26 to $14.47. However, it’s noteworthy that FY25 and FY26 EPS estimates have declined over the last 60 days.
Image Source: Zacks Investment Research
On the top line, Avis’s total sales are currently slated to rise 1% in FY25 and are projected to increase another 2% in FY26 to $12.2 Billion.
Image Source: Zacks Investment Research
CAR Valuation Comparison
At current levels, CAR trades at just 8.7X forward earnings. This is a significant discount to its Zacks Transportation-Services Industry average of 16.5X with some of the other notable companies in the space being C.H. Robinson Worldwide (CHRW - Free Report) , REV Group (REVG - Free Report) , and Hertz Global (HTZ - Free Report) .
It’s noteworthy that Hertz isn’t profitable so P/E valuation can’t be used in comparison to its rental car competitor. That said, like Hertz, Avis trades at less than 1X sales which is on par with the industry average.
Image Source: Zacks Investment Research
Conclusion & Strategical Thoughts
Undoubtedly, Avis stock is attractive to long-term investors under $100 a share but there could be better buying opportunities ahead. To that point, if EPS estimates continue to decline it may be time to fade the recent rally as this could likely lead to more downside risk in CAR shares and a sell rating despite Avis's attractive valuation.
That said, an uptick in EPS revisions could lead to a buy rating and is plausible if imported vehicle tariffs start to show a positive impact on the company’s operations and fleet value. For now, Avis stock lands a Zacks Rank #3 (Hold).