Avis Budget Group, Inc. (CAR – Free Report) is benefiting from strong car rental demand, strategic fleet management, technology investments, and share buybacks, boosting profitability and investor confidence. The Zacks Consensus Estimate for the company’s 2025 earnings is 1.38 per share, indicating an 182% year-over-year increase.
The car rental industry, particularly in North America, has been experiencing strong demand driven by changes in consumer behavior, including an emphasis on short-term vehicle access rather than ownership. Avis Budget’s strong market share positions it to capitalize on these trends. As global travel continues to rebound from pandemic blues, Avis Budget Group has benefitted from increased demand for car rentals, both in leisure and business travel. The company’s revenues increased at a compound annual growth rate of 8.8% from 2021 to 2023.
Avis Budget Group, Inc. Revenue (TTM)
Avis Budget Group, Inc. revenue-ttm | Avis Budget Group, Inc. Quote
Avis Budget’s strategic management of its fleet, including the acquisition of vehicles at favorable prices and then the quick adjustment of its fleet size based on demand, has contributed to better operational efficiency. This flexibility has allowed CAR to mitigate the effects of supply chain disruptions, particularly those involving vehicle shortages. Enhanced fleet utilization, cost control, and operational efficiency have bolstered CAR’s profitability and enabled the company to maintain margins despite inflationary pressures.
CAR has invested in technology to enhance its customer experience. The company simplifies online interactions, making reservations, pick-ups and returns user-friendly. Partnerships with Alphabet and Amazon enable voice-controlled access via Google Assistant and Amazon Alexa devices. The focus extends to expanding the fleet of connected vehicles managed through the Avis mobile app, which streamlines operations, reduces costs, and enables real-time inventory tracking, mileage monitoring and automated maintenance alerts. The data generated by these vehicles, including road conditions, accident zones, weather, and user preferences, could become a valuable asset with the potential for future monetization.
Avis Budget has an impressive track record of share repurchases.In 2021, 2022 and 2023, the company bought back shares worth $1.46 billion, $3.33 billion and $951 million, respectively. Such moves underline the company’s confidence in business and help boost investors’ confidence in the stock by positively impacting earnings per share.
However, Avis Budget does not offer quarterly dividends, meaning that the sole source of returns for its shareholders comes from capital appreciation. Investorsseeking quarterly dividends should avoid buying Avis Budget shares.
With a current ratio of 0.7 compared to the industry average of 1.25, CAR falls below the threshold typically indicative of strong liquidity. A ratio below 1 suggests potential challenges in meeting short-term financial obligations.
Zacks Rank and Stocks to Consider
CAR currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Climb Global Solutions (CLMB – Free Report) and Parsons (PSN – Free Report) .
Climb Global Solutions flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CLMB has a long-term earnings growth expectation of 16%. It delivered a trailing four-quarter earnings surprise of 51.1%, on average.
Parsons sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 18.6%. PSN delivered a trailing four-quarter earnings surprise of 17.5%, on average.
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