A month has gone by since the last earnings report for Hertz (HTZ Quick QuoteHTZ - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hertz due for a breakout? 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 Wider Than Expected Loss in Q2

Hertz Global incurred a loss (excluding $2.35 from non-recurring items) of $3.51 per share in second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.33. In the year-ago period, the company reported earnings of 74 cents per share. Similar to the first quarter, second-quarter results were affected by decreased demand for rental cars amid coronavirus concerns. However, the impact in the second quarter is much greater.

Quarterly revenues of $832 million also missed the Zacks Consensus Estimate of $918.9 million. The top line declined 66.9% 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 $533 million, down 70% year over year. While airport rental-car volumes declined 82% due to weakness in air-travel demand caused by coronavirus, off airport volumes decreased 47%.

Vehicle utilization declined to 28% from 82% a year ago. Transaction days fell 69% year over year. Total revenue per transaction day (“RPD”) decreased 10%. Adjusted EBITDA for the segment was ($470 million) in the second quarter against $156 million a year ago.

Segmental direct-vehicle and operating expenses dropped 47% to $561 million. Meanwhile, interest expenses climbed 8%. However, selling, general and administrative expenses declined 47% year over year. Costs reduced due to strict cost-control measures and low volumes.

The International Rental Car segment generated revenues of $135 million, down 76% year over year. Airport rental-car volumes plunged 84%, while off-airport volumes dropped 47%. Vehicle utilization fell to 36% from 77% in the year-ago quarter. Segmental RPD declined 24% year over year.

Segmental direct vehicle and operating costs fell 59% year over year to $136 million. While interest expenses contracted 3%, selling, general and administrative expenses fell 28% year over year. Adjusted EBITDA for the segment came in at ($127 million) compared with $56 million in second-quarter 2019.  Meanwhile, revenues from all other operations dipped 1% to $164 million.

Balance Sheet Highlights

The company exited the second quarter with cash and cash equivalents of $1,366 million compared with $865 million at the end of 2019. Restricted cash and cash equivalents at the end of the period came in at $945 million compared with $495 million at 2019-end. As of Jun 30, 2020, total debt amounted to $12.98 billion compared with $17.09 billion as of Dec 31, 2019.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -25.68% due to these changes.

VGM Scores

Currently, Hertz has a subpar Growth Score of D, 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 20% 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 this revision 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.