Hertz Expands Rental Business

Zacks

In an attempt to enhance its operational activities, Hertz Global Holdings, Inc. (HTZ) yesterday announced that its equipment rental business arm, Hertz Equipment Rental Corporation has opened a new facility in Paso Robles, California.

The new 15,000 square-foot showroom will serve the needs of non-residential construction, oil and gas, as well as agricultural markets of the Central Coast of California. With the addition of this new facility, the company now has 5 Hertz Equipment Rental showrooms within a radius of 100 miles.

Last week, the equipment rental subsidiary opened a 25,000 square-foot showroom in Spokane Valley, Washington. The Spokane Valley facility is Hertz Equipment Rental’s largest fleet network in the Pacific Northwest region of the United States.

Hertz Equipment Rental Corporation is a wholly owned subsidiary of Hertz Global, the world’s largest equipment rental services provider since 1965. The company provides a wide range of equipment and tools for rent as well as sale. It offers services on a daily, weekly, monthly and long-term rental basis in the United States, Canada, China, France, Spain and Saudi Arabia and has facilities in about 360 locations. The company is also engaged in the new and used equipment sale business.

Hertz Global, which competes with Avis Budget Group, Inc. (CAR), is aggressively expanding its operations by opening facilities at new locations and collaborating with other companies to grow businesses. The latter measure was evident from the company’s announcement last week of a multi-year partnership agreement with Sentient Jet, a Directional Aviation Capital company.

As per the deal, the card holders of Sentient Jet will have the option to become members of Hertz Platinum. Apart from this, the members will have access to Hertz Dream Cars from 2014.

Hertz Global is the leading airport car rental brand in the United States. Of late, the company’s Hertz brand in the U.S. airport car rental market has been generating weaker volumes, thereby limiting revenue growth.

The partnership with Sentient Jet is expected to benefit both the companies. For Hertz Global, the tie-up will facilitate expansion of its customer base and drive top-line growth. Sentient Jet, on the other hand, will be able to provide its members high quality services.

In late Sep 2013, owing to weaker volumes in its largest business segment, Hertz Global lowered its outlook for fiscal 2013. The company now projects revenues for fiscal 2013 in the range of $10,800.0–$10,900.0 million, down from $10,850.0–$10,950.0 million forecasted earlier. Further, the company now expects adjusted earnings per share in the band of $1.68–$1.78 versus $1.78–$1.88 projected earlier.

Hertz Global currently holds a Zacks Rank #5 (Strong Sell). However, other stocks that are performing well in the business services sector and are worth a look include WNS (Holdings) Ltd. (WNS) and SPS Commerce, Inc. (SPSC). Both the stocks carry a Zacks Rank #2 (Buy).

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