Avis Budget Group Inc.
) rallied to reach a new 52-week high of $29.53 on Tuesday, Apr
2, following the announcement of expanding its Taiwan operations
on the previous day. Additionally, the shares of this global
vehicle rental giant continue to gain from robust sales and
improved earnings performance for the fourth quarter of 2012, an
encouraging 2013 outlook, an aggressive expansion policy, notable
return on equity, reasonable valuation and positive travel demand
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Average volume of shares traded over the last 3 months stands at
approximately 1,884K. This Zacks Rank #3 (Hold) car rental
company closed trade at $28.19 on Apr 2, representing a solid
year-to-date return of approximately 35.7%. Moreover, the stock
currently trades at a forward P/E of 12.0x, at a 28.1% discount
with the peer group average of 16.7x.
On Apr 1, Avis Car Rental entered into a partnership with Taiwan
High Speed Rail ("THSR") to provide rental services at 6 THSR
stations in west Taiwan, thus expanding its total rental facility
centers in Taiwan to 20. The company's strategic move is backed
by the rising car rental demand on the island as well as
accelerating economic growth.
Moreover, Avis Budget remains aggressively focused on expanding
its operations through acquisitions and joint ventures. In an
effort to enhance its global footprints, the company is investing
in other promising markets where car rental demand is speeding.
Avis' urge to exploit new avenues became evident from the recent
acquisition of Zipcar Inc., wherein the company expanded its
offerings from car rental to car sharing. We believe that these
strategies along with better customer support systems will boost
the company's top line.
With respect to earnings surprises, the company has a history of
beating the Zacks Consensus numbers. The company has posted
positive surprises in 3 of the last 4 quarters. The average
positive surprise in the trailing 4 quarters comes to 78.7%.
Avis Budget posted better-than-expected bottom line results for
the fourth quarter of 2012, significantly narrowing its loss,
benefitting from robust top-line performance as well as improved
margins. Adjusted loss per share of $0.07 fared better than the
Zacks Consensus Estimate of a loss of $0.08 and improved 50% from
a loss of $0.14 delivered in the prior-year quarter.
Avis Budget's net revenue increased 4% to $1.698 billion from
$1.630 billion in fourth-quarter 2011, beating the Zacks
Consensus Estimate of $1.641 billion.
Further, the company provided encouraging revenue and earnings
outlook for 2013. The company expects full-year 2013 total
revenue to come in between $7.6 billion and $7.8 billion, with
adjusted earnings of $1.90-$2.45 per share.
Additionally, the company continues to witness significant
strength driven by the positive travel demand trends, while the
integration of its Avis Europe and Apex Car Rentals businesses is
progressing smoothly. Moreover, it expects incremental cost
savings from its Performance Excellence initiative as well as a
5-point cost-reduction and efficiency improvement plan, which
should boost profitability.
Besides Avis, other stocks in the retail space that touched
all-time highs on Apr 2 are
Campbell Soup Company
Archer Daniels Midland Company
), reaching $46.45, $118.97 and $34.28, respectively.