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Why Is Avis Budget (CAR) Up 61.8% Since Last Earnings Report?

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Zacks Equity Research
·3 min read
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A month has gone by since the last earnings report for Avis Budget Group (CAR). Shares have added about 61.8% 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 its most recent earnings report in order to get a better handle on the important drivers.

Avis Budget Tops Q4 Earnings Estimates, Revenues Miss

Avis Budget reported mixed fourth-quarter 2020 results wherein earnings beat the Zacks Consensus Estimate but revenues missed the same.

Adjusted loss per share of 36 cents beat the Zacks Consensus Estimate by 10% but fell more than 100% year over year. Total revenues of $1.36 billion lagged the consensus estimate by 1.6% and declined 37.3% year over year.

Revenues by Segment

Americas segment revenues of $1.03 billion declined 33% year over year. The segment contributed 76% to total revenues.

International segment revenues of $326 million fell 48% year over year. The segment contributed 24% to total revenues.

Profitability

Adjusted EBITDA was $74 million, down 48% from the prior-year quarter. Adjusted EBITDA margin fell to 5.5% from 6.6% in the year-ago quarter.

Adjusted EBITDA for Americas was $113 million, down 22% from the prior-year quarter. Internationally, adjusted EBITDA was a loss of $28 million against a profit of $16 million in the prior-year quarter.

Balance Sheet and Cash Flow

Avis Budget exited fourth-quarter 2020 with cash and cash equivalents of $692 million compared with $1.56 billion at the end of the prior quarter. Corporate debt was $4.21 billion compared with $4.16 billion at the end of the prior quarter.

The company generated $59 million of net cash from operating activities in the reported quarter. Adjusted free cash outflow was $831 million and capital expenditures were $19 million in the reported quarter.

Outlook

Withmacro-economic uncertainties still persisting and the travel industry suffering because of the same, Avis Budget did not provide any guidance. The company is looking forward to the rollout of the vaccine. For 2021, the company is hopeful of controlling costs and improving its top-line growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Avis Budget has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. 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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Zacks Investment Research