About a month has gone by since the last earnings report for Avis Budget Group, Inc.CAR . Shares have added about 7.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Lags Q2 Earnings Estimates, Updates 2017 View
Avis Budget reported mixed second-quarter 2017 results wherein adjusted earnings per share were 30 cents compared with 63 cents in the prior-year quarter. Adjusted earnings also missed the Zacks Consensus Estimate of 42 cents.
GAAP earnings for the quarter was 4 cents per share compared with 38 cents in the prior-year quarter due to a decline in revenues.
Revenues were $2,238 million compared with $2,243 million in the year-ago quarter. The top line declined primarily due to higher operating expenses. However, revenues beat the Zacks Consensus Estimate of $2,227 million.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $140 million compared with $204 million in the year-ago quarter, driven by higher per-unit fleet costs in both its segments.
Americas reported revenues of $1,565 million compared with $1,593 in the prior-year quarter, primarily due to 4% reduction in time and mileage revenue per day. Per-unit fleet costs increased 10% to $344 million.
The International segment's revenues were up 4% year over year to $673 million, due to 6% benefit from FranceCars which was acquired in Dec 2016, including a 3% negative impact from currency movements.
Avis ended the first six months of the year with cash and cash equivalents of $776 million. During the period, the company generated $1,139 million as cash flow from operating activities. It reported free cash flow of $397 million during the same period. Avis repurchased 1.9 million shares worth $50 million during the quarter.
The company updated its guidance for full-year 2017. It expects revenues to be in the range of $8.8−$8.95 billion. In the Americas segment, per-unit fleet costs are expected to be between 7% and 8%. Adjusted EBITDA is expected to be in the range of $725−$775 million, down from the earlier expectation of $800−$880 million. Adjusted earnings per share are expected between $2.40 and $2.85, down from the earlier expectation of $2.85-$3.50. The company expects to repurchase $200-$250 million worth of stocks in 2017, which is lower than the earlier guidance of $300 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
Avis Budget Group, Inc. Price and Consensus
At this time, the stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
While estimates have been broadly trending upward for the stock, the magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
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