Avis Budget Group, Inc.
) surged 12.2% since it came out with fourth quarter and
fiscal 2013 results on Feb 19, 2014. The momentum gathered from
the robust earnings led the stock to hit a new 52-week high of
$44.89 on the last trading day. It eventually closed at $44.88,
amassing a significantly high return of 98.8% over the past one
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The company posted better-than-expected fourth-quarter and fiscal
2013 results, mainly on the back of synergies realized from its
long-term strategic plans. Results for both periods benefited
from strong volume growth and pricing that stemmed from continued
investments in the company's highly profitable customer segments
Fourth-quarter 2013 adjusted earnings per share of 15 cents
surpassed the Zacks Consensus Estimate of 12 cents and reflected
a significant improvement from a loss of 7 cents per share
reported in the prior-year quarter. Avis Budget's net revenue
increased 8.9% year over year to $1,849 million in the fourth
quarter and surpassed the Zacks Consensus Estimate of $1,833
million. Top and bottom lines were aided by strong contributions
from recent acquisitions including Zipcar and Payless Car Rental.
Other than this, the recent momentum in the stock was mainly
driven by a rebound in leisure and business travels owing to
recovery in the U.S. economy and increased spending by
individuals. Furthermore, while the company is growing due to an
uptick in travel demand, the integration of its Avis Europe and
Apex Car Rentals businesses is progressing well too.
Apart from recent positive industry trends, we believe that the
company's record of beating quarterly earnings expectations and
sustained focus on increasing its global footprint make the stock
an attractive option for investors. With respect to earnings
surprises, this Zacks Rank #2 (Buy) company has posted positive
surprises in 4 of the last 5 quarters with an average beat of
27.1%. The company's long-term EPS growth rate is 14.9%, above
the peer group average of 14.3%.
Additionally, the company is focused on enhancing its operational
efficiency, as is evident from its recent launch of a used car
sales program "Avis Direct", with a dedicated website for
automobile dealers. The new program will allow dealers to
purchase from a wide variety of late-model off-rental vehicles
across the company's Avis, Budget, Payless and Zipcar rental
locations in the United States, free of any enrollment or
This leading car rental company currently trades at a forward P/E
of 16.6x, in line with its peer group average. Its last traded
price is 15.7% above the Zacks Consensus average analyst price
target of $38.80. Average volume of shares traded over the last 3
months stands at approximately 1,757.1K.
Apart from Avis Budget,
Post Holdings, Inc.
) also hit 52-week highs of $66.60, $57.54 and $86.45,
respectively, on Feb 21, 2014.