Avis Budget Group Inc. (NYSE: CAR)
Avis Budget Group Inc. (CAR) provides car and truck rentals and ancillary services to businesses and consumers in the United States and internationally. The Company operates two of the brands in the global vehicle rental industry through Avis and Budget. Avis is a rental car supplier to the commercial and leisure segments of the travel industry and Budget is a rental car supplier to the price-conscious segments of the industry. The Company operates in three business segments: Domestic Car Rental, consisting of its Avis and Budget United States car rental operations; International Car Rental, consisting of its international Avis and Budget car rental operations, and truck rental, consisting of its Budget truck rental operations. It also provides Avis Preferred, a counter bypass program; Where2, a GPS navigation system; Avis Cool Cars, a line of fun-to-drive vehicles; Roving Rapid Return, a wireless technology, which permits customers to obtain a printed charge record from service agents; Avis Access, a program for drivers and passengers with disabilities; Avis Interactive, a management tool for corporate clients to view and analyze their rental activity via Internet through account analysis and activity reports; Avis First Program, a customer loyalty program that rewards customers with additional benefits for frequent rentals; and Chauffeur Drive, a service, which allows customers to hire a professional driver to drive their Avis rental car.
In addition, the Company offers Fastbreak, an expedited rental service for frequent travelers; Budget Small Business Program, a program for small businesses that offers discounted rates and central billing options; and Unlimited Budget, a loyalty program for travel professionals. Further, it engages in the sale and/or rental of supplemental equipment, loss damage waivers, additional/supplemental liability insurance, personal accident/effects insurance, fuel service options, fuel service charges, and electronic toll collection.
The Company was formerly known as Cendant Corporation and changed its name to Avis Budget Group Inc. in August 2006. Avis Budget Group was founded in 1946 and is based in Parsippany, New Jersey.
|
Share Statistics Oct-30-09 |
|
2007 |
2008 |
%Chg |
Q2 2008 |
Q2 2009 |
% Chg |
|
|
Symbol |
CAR |
Revenue, Mn |
5.986B |
5.984B |
0.03% |
1.577B |
1.312B |
16.8% |
|
Current price |
$8.92 |
Gross margin |
0.5% |
-6.0& |
5.5 |
-4.2% |
-3.5% |
0.7 |
|
52wk Range: |
$0.34-$14.14 |
Oper. margin |
-16.6% |
-22.4% |
5.8 |
1.6% |
0.2% |
1.4 |
|
Avg Vol (3m): |
3,135,228 |
Net margin |
-15.3% |
18.8% |
3.5 |
1.0% |
-0.5% |
1.5 |
|
Market Cap. |
879.05M |
|
|
|
|
|
|
|
|
Dil. Shares Outst. |
102.0M |
EPS, $ |
-9.18 |
-11.03 |
16.8% |
-0.09 |
-0.06 |
33.3% |
Source: https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=CAR
Financial Summary
CAR will report its third quarter 2009 results after the market close November 2, 2009, followed by a conference call November 3, 2009.
For the second quarter ended June 30, 2009, the Company posted revenue of $1.3 billion, down 17% from the same quarter of 2008.
The Company attributed the decline to a significant decline in demand for vehicle rentals; however, management noted it was able to stabilize rental volume and achieve a better-than-expected 7% increase in domestic time and mileage revenue per day.
Car rental fleet costs decreased 10% primarily due to a 21% reduction in average fleet and an exchange rate benefit of 2% offset by a 16% increase in the Company’s per-unit fleet costs. The year-over-year increase in
per-unit fleet costs reflect CAR’s continued efforts to reduce its fleet size due to lower-than-expected demand for vehicle rentals.
Other operating expenses decreased 260 basis points to 48.7% of revenue and declined 90 basis points excluding the impact of gas, despite the 17% decline in revenue, reflecting the Company’s cost saving initiatives.
Selling, general and administrative costs declined 80 basis points to 10.0% of revenue, also reflecting cost saving initiatives.
In Truck Rental, revenue declined but EBITDA increased modestly as an 8% decline in rental days and a slight decrease in price were offset by operating cost reductions and lower fleet costs.
The Company recorded an expected $8 million restructuring charge primarily related to the elimination of 400
additional employee positions along with various facility closures, in conjunction with its five-point cost-reduction and efficiency improvement plan.
Source http://phx.corporate-ir.net/phoenix.zhtml?c=119532&p=irol-sec
Analyst Consensus
|
Buy |
Outperform |
Hold |
Underperform |
Sell |
No Opinion |
This is the consensus forecast amongst 1 polled investment analysts. Against the Avis Budget Group Inc. company.
|
Analyst Detail |
Buy |
Outperform |
Hold |
Underperform |
Sell |
No Opinion |
|
Latest |
0 |
0 |
1 |
0 |
0 |
0 |
|
4 weeks ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
2 months ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
3 months ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
Last year |
1 |
1 |
3 |
0 |
0 |
0 |
The one analyst offering a 12-month price target expects CAR share price to rise to 10.00 in the next year from the last price of 9.19.
Source: Financial Times.com
|
|
# of Estimates |
Mean |
High |
Low |
1 Year |
|
SALES (in millions) |
|||||
|
Year Ending Dec-09 |
1 |
5,259.00 |
5,259.00 |
5,259.00 |
6,135.20 |
|
Year Ending Dec-10 |
1 |
5,724.00 |
5,724.00 |
5,724.00 |
6,247.50 |
|
Earnings (per share) |
|||||
|
Quarter Ending Dec-09 |
1 |
-0.04 |
-0.04 |
-0.04 |
0.16 |
|
Quarter Ending Mar-10 |
1 |
-0.21 |
-0.21 |
-0.21 |
-0.02 |
|
Year Ending Dec-10 |
1 |
0.80 |
0.80 |
0.80 |
0.57 |
Source: http://www.reuters.com/finance/stocks/estimates?symbol=CAR
Investment Highlights
CAR earlier this month announced the pricing and close of its offering of $300 million aggregate principal amount of 3.50% convertible senior notes due 2014. The notes were offered and sold solely to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. CAR granted the initial purchasers of the notes the right to purchase up to an additional $45 million aggregate principal amount of notes solely to cover over-allotments.
The initial conversion rate for the notes was 61.5385 shares of common stock per $1,000 principal amount of the notes, which is equal to an initial conversion price of approximately $16.25 per share, representing a 30% conversion premium above a closing price of CAR’s common stock of $12.50 per share. The notes mature October 1, 2014. The Company will settle any conversion of the notes through the delivery of shares of its common stock. CAR intends to simultaneously enter into a warrant transaction and to purchase a convertible note hedge. The Company intends to use approximately 10% of the net proceeds from the offering to pay the cost of the convertible note hedge (after such cost is partially offset by the proceeds from the warrant transaction) and to use the balance for general corporate purposes, including the repayment of debt. The effect of the convertible note hedge and warrant transaction, or “call spread,” will be to increase the effective conversion premium of the notes from the Company’s perspective to 80% above today’s closing price of CAR’s common stock.
Budget Rent A Car this month announced that it has been named “Car Rental Supplier of the Year” by Travel Leaders (formerly Carlson Wagonlit Travel Associates), one of the largest leisure and corporate managed business travel agency networks in the world. The “Supplier of the Year” awards, presented during the 2009 Travel Leaders National Meeting held in Salt Lake City, Utah, recognize suppliers for their products and services, customer service and sales support.
Budget Rent A Car last month announced great savings on vehicles for rent at neighborhood locations this fall. Now, for a limited time, customers can save 15 percent on daily, weekend and weekly base rates of SUV rentals. Customers needing less room can rent a mid-size vehicle for a base rate of $195 per week, or choose from a standard or full-size vehicle for a base rate of $205 per week.
CAR was recently recognized by AARP as one of the “best workplaces” for people more than 50, for its commitment to recruiting, hiring and retaining older workers. The Company shares the 2009 Best Employers for Workers Over 50 spotlight with other honorees including: Cornell University, S.C. Johnson & Son, Blue Cross and Blue Shield of New Jersey, Michelin North America and Intel Corporation. CAR has long been an attractive choice for workers over the age of 50. Currently, nearly half of its workforce (47%) falls into that group. AARP cited the Company’s efforts to meet the needs of older workers. CAR regularly invites all employees to complete a workplace satisfaction survey and uses senior placement agencies to identify and hire workers over the age of 50.
Source: Scottrade.com, Reuters.com, http://www.avisbudgetgroup.com/
Technical Analysis
Moving Average Price Compare
CAR is substantially below its 50-day moving average. Although the moving average is still trending higher, it is likely that it will begin to follow the stock price lower.
Bollinger Bands
CAR is trading below its lower Bollinger Band. Relative to recent price action, the stock is currently overextended to the downside and due for either a pause or retracement.
MACD
The MACD for CAR currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.
Comparative Analysis
|
Company Name |
Ticker |
Price per |
Mrkt. Cap. |
P/E |
P/S |
||
|
Oct-30-2009 |
symbol |
Share, $ |
$ Mn |
2009 |
2010 |
2009 |
2010 |
|
Dollar Thrifty Automotive Group Inc. |
DTG |
19.48 |
420.1M |
N/A |
N/M |
0.28 |
N/M |
|
Hertz Global Holdings Inc. |
HTZ |
9.54 |
863.8M |
N/A |
N/M |
0.17 |
N/M |
|
Ryder Systems Inc. |
R |
41.71 |
2.4B |
N/A |
N/M |
N/A |
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median |
|
23.57 |
1.2B |
|
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
Avis Budget Group Inc . |
CAR |
8.92 |
860.7M |
N/A |
N/M |
0.17 |
N/M |
Source: Reuter.com, Nasdaq.com
Insider Trading Activity
Net Share Purchase Activity
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Data provided by Thomson Financial |
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