Avis Budget Group Inc.CAR reported dismal fourth-quarter 2016 results. The company's adjusted earnings were $13 million or 15 cents per share compared with $18 million or 18 cents per share in the prior-year quarter. Adjusted earnings missed the Zacks Consensus Estimate of 16 cents.
GAAP loss for the quarter were $31 million or 35 cents per share compared with loss of $5 million or 6 cents in the prior-year quarter. Decline in earnings were driven by fall in revenues during the quarter.
Revenues for the quarter were $1,879 million compared with $1,902 million in the year-ago quarter. Revenues missed the Zacks Consensus Estimate of $1,956 million. Revenues declined primarily due to decrease in rental days and pricing in the Americas, as well as fall in International pricing.
Adjusted EBITDA was $121 million compared with $128 million in the year-ago quarter. The softer-than-expected volume and pricing as well as currency movements had an adverse impact on the company's adjusted EBITDA.
For the full year, the company reported adjusted income of $273 million or $2.93 per share compared with $333 million or $3.17 per share, a year ago. Revenues for the full year were $8,659 million compared with $8,502 million in the prior year.
Americas reported revenues of $1,343 million compared with $1,362 in the prior-year quarter, primarily due to a 1% decrease in rental days and a 1% fall in pricing. Adjusted EBITDA decreased to $101 million primarily due to lower revenues and higher per-unit fleet costs.
The International segment's revenues were down 1% year over year to $536 million, due to 5% lower pricing, including a 2% reduction due to currency movements, partially offset by a 3% increase in volume. Adjusted EBITDA for the segment increased 13% to $36 million, due to higher volumes and expense savings.
Avis ended the year with cash and cash equivalents of $490 million and total corporate debt of $3,523 million. As of Dec 31, 2016, the company's shareholders' equity was $221 million. During the year, the company generated $2,629 million as cash flow from operating activities.
Avis repurchased 2.8 million shares worth $100 million. For the full year, the company repurchased 12.3 million shares worth $390 million.
Avis Budget Group, Inc. Price, Consensus and EPS Surprise
During the quarter, the company completed the acquisition of France Cars. This buyout will help the company position itself as the second-largest light commercial vehicle fleet operator in France, while providing it a strong presence in the French local market. This acquisition will likely help the company improve its revenues in the impending quarter.
Full-year 2017 revenues are expected to be in the range of $8.8−$8.95 billion. Movements in currency exchange rates are currently expected to hurt revenue growth by approximately $130 million.
Per-unit fleet costs are expected to be in the range of $280−$290 per month in 2017 compared with $285 in 2016. In the Americas segment, per-unit fleet costs are expected to be between $311 and $321. In the International segment, per-unit fleet costs are expected to be between $210 and $220 per month, compared with $227 per month in 2016, including a 5% decrease from currency exchange rates.
Adjusted EBITDA is expected to be in the range of $840−$920 million. For 2017, adjusted earnings per share are expected to be between $3.05 and $3.75. The company expects to repurchase $300 million or more stocks in 2017.
Avis currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same space include S&P Global, Inc. SPGI and Verisk Analytics, Inc. VRSK and IHS Markit Ltd. INFO . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Verisk Analytics has an impressive long-term earnings growth rate of 11.6%.
IHS Markit has an impressive long-term earnings growth rate of 13.5%.
S&P Global has an impressive long-term earnings growth rate of 12.3%.
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