Avis Budget (CAR) Up 70.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Avis Budget Group (CAR). Shares have added about 70.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Avis Budget due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Avis Budget Surpasses Q1 Earnings and Revenues Estimates
Avis Budget reported first-quarter 2020 adjusted loss of $1.40 per share, narrower than Zacks Consensus Estimate loss of $1.91 but wider than loss of 78 cents in the year-ago quarter.
Total revenues of $1.75 billion outpaced the consensus estimate by 0.9% but declined 8.7% year over year due to 7% decrease in rental days and a 1% decrease in revenues per day.
Revenues by Segment
Americas segment revenues of $1.26 billion decreased 5% year over year. The segment accounted for 72% of total revenues.
International segment revenues of $496 million went down 16% year over year. The segment contributed 28% to total revenues.
Profitability
Adjusted EBITDA loss was $87 million compared with a loss of $1 million in the prior-year quarter.
Adjusted EBITDA loss for Americas was $30 million against a gain of $35 million in the prior-year quarter. Internationally, adjusted EBITDA loss was $40 million, compared with a loss of $21 million in the prior-year quarter.
Balance Sheet and Cash Flow
Avis Budget exited first-quarter 2020 with cash and cash equivalents of $679 million compared with $686 million at the end of the prior quarter. Corporate debt was $3.51 billion compared with $3.44 billion at the end of the prior quarter.
The company generated $370 million of cash from operating activities in the reported quarter. Adjusted free cash flow totaled $81 million and capital expenditure was $49 million. The company repurchased shares worth $118 million in the reported quarter.
2020 Guidance
Revenues in April and May are expected to be around 80% lower, with a gradual recovery in June and improvement thereafter, considering that shelter-in-place restrictions get lifted and leisure travel resumes.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -22.09% due to these changes.
VGM Scores
At this time, Avis Budget has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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 these revisions indicates a downward shift. Notably, Avis Budget has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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