A week ago, Avis Budget Group, Inc. (NASDAQ:CAR) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$1.5b, some 8.4% above estimates, and statutory earnings per share (EPS) coming in at US$0.63, 273% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Avis Budget Group's five analysts are now forecasting revenues of US$7.30b in 2021. This would be a solid 18% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 58% to US$2.62. Before this latest report, the consensus had been expecting revenues of US$7.28b and US$1.11 per share in losses. So it's pretty clear the analysts have mixed opinions on Avis Budget Group even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
As a result, there was no major change to the consensus price target of US$41.50, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Avis Budget Group at US$60.00 per share, while the most bearish prices it at US$35.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avis Budget Group's past performance and to peers in the same industry. For example, we noticed that Avis Budget Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 18%, well above its historical decline of 1.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.8% per year. Not only are Avis Budget Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Avis Budget Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Avis Budget Group going out to 2022, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Avis Budget Group , and understanding it should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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