Will Avis Budget (CAR) Miss Earnings Estimates?

Zacks Equity Research

Avis Budget Group Inc. (CAR) is scheduled to report its first-quarter fiscal 2014 results after the market closes on May 7. Last quarter, this leading global car rental company posted a positive earnings surprise of approximately 25.00%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Avis Budget posted better-than-expected fourth-quarter and fiscal 2013 results mainly on the back of synergies realized from its long-term strategic plans. Results for both periods benefited from strong volume growth and pricing that stemmed from continued investments in the company’s highly profitable customer segments and channels. Further, top and bottom lines were aided by strong contributions from recent acquisitions including Zipcar and Payless Car Rental. Additionally, Avis Budget provided an impressive forecast for fiscal 2014 with projected revenue growth of 5–7% and adjusted earnings per share growth of 11–30%.

Earnings Whispers?

Our proven model does not conclusively project Avis Budget as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
 
Zacks ESP: ESP for Avis Budget is 0.00% since the Most Accurate estimate stands at 8 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks Rank #3 (Hold): Avis Budget’s Zacks Rank #3 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

The Walt Disney Company’s (DIS) Earnings ESP stands at +1.03% and it carries a Zacks Rank #2 (Buy).

CST Brands Inc. (CST) with an Earnings ESP of +14.29% holds a Zacks Rank #3.

Vitamin Shoppe Inc. (VSI) has an Earnings ESP of +1.47% and a Zacks Rank #3.

Read the Full Research Report on CAR
Read the Full Research Report on DIS
Read the Full Research Report on VSI
Read the Full Research Report on CST


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