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Will Hertz (HTZ) Miss Earnings Estimates? - Analyst Blog

Posted: 6/6/2014 12:20:00 PM
Referenced Stocks: AAN;HTZ;FBHS;FIVE

Hertz Global Holdings, Inc. ( HTZ ), one of the leading general-use car rental brands, is slated to report its first-quarter fiscal 2014 earnings on Jun 9. In the previous quarter, Hertz recorded a negative earnings surprise of 18.8%. Let's see how things are shaping up for this announcement.       

Factors Influencing this Quarter

The company has been on track to implement strategies related to effective pricing and optimum use of technological resources. With continued innovations and product advancements, the company is likely to enhance efficiency, increase brand recognition, manage costs well and boost sales. However, the rental industry continues to be in a nascent stage of economic recovery. This, along with the Easter shift, makes us cautious about this quarter.

Earnings Whispers

Our proven model does not conclusively show that Hertz is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below:

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 9 cents.

Zacks Rank: Hertz carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Aaron's, Inc. ( AAN ), Earnings ESP of +6.52% and a Zacks Rank #1 (Strong Buy).

Five Below, Inc. ( FIVE ), Earnings ESP of +7.69% and a Zacks Rank #2 (Buy).

Fortune Brands Home & Security, Inc. ( FBHS ), Earnings ESP of +3.51% and a Zacks Rank #3.

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