Localiza Rent A Car SA's Dividend Analysis
A Comprehensive Review of Localiza Rent A Car SA's Dividend Performance and Sustainability
Localiza Rent A Car SA(LZRFY) recently announced a dividend of $0.01 per share, payable on 2023-11-06, with the ex-dividend date set for 2023-10-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Localiza Rent A Car SA's dividend performance and assess its sustainability.
What Does Localiza Rent A Car SA Do?
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Localiza Rent A Car SA is a car rental service provider with the majority of its operations in Brazil. Through its subsidiaries, the company rents cars to individuals, manages corporate car fleets, sells its fleet to the general public, and offers a franchise model. Franchisees account for roughly half of Localize's car rental locations, while the majority of cars accessible with Localize are owned by the company. The fleet rental division has long-term agreements with companies that come up for renewal roughly every two to three years. The car rental segment delivers three-quarters of yearly revenue, and fleet rental makes up the rest, with an insignificant share contributed by the franchise management division.
A Glimpse at Localiza Rent A Car SA's Dividend History
Localiza Rent A Car SA has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Localiza Rent A Car SA's Dividend Yield and Growth
As of today, Localiza Rent A Car SA currently has a 12-month trailing dividend yield of 2.80% and a 12-month forward dividend yield of 2.80%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Localiza Rent A Car SA's annual dividend growth rate was 49.40%. Extended to a five-year horizon, this rate decreased to 32.80% per year. And over the past decade, Localiza Rent A Car SA's annual dividends per share growth rate stands at an impressive 26.90%.
Based on Localiza Rent A Car SA's dividend yield and five-year growth rate, the 5-year yield on cost of Localiza Rent A Car SA stock as of today is approximately 11.57%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Localiza Rent A Car SA's dividend payout ratio is 1.18. And this may suggest that the company's dividend may not be sustainable.
Localiza Rent A Car SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Localiza Rent A Car SA's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Localiza Rent A Car SA's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Localiza Rent A Car SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Localiza Rent A Car SA's revenue has increased by approximately 14.60% per year on average, a rate that outperforms than approximately 76.85% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Localiza Rent A Car SA's earnings increased by approximately 24.00% per year on average, a rate that outperforms than approximately 66.15% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 28.40%, which outperforms than approximately 85.05% of global competitors.
Next Steps
In conclusion, Localiza Rent A Car SA's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics all paint a comprehensive picture of the company's financial health and future prospects. While the high payout ratio raises some concerns about the sustainability of the dividend, the company's strong profitability and impressive growth metrics provide reassurance for investors. As always, investors are advised to conduct their own thorough research before making any investment decisions.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
