Avis Budget Group (CAR) is trading just above a level of support and with solid valuations, making a great entry point.
Company Description
Avis Budget Group provides car and truck rentals in more than 70 countries under its 2 brands, Avis and Budget.
Beat the Street
On May 3 Avis Budget Group announced quarterly results that showed revenue of $1.2 billion, which was off slightly since last year. However, thanks to improving margins they were able report a smaller loss than expected.
The company lost 13 cents, about half of what was expected. One year ago Avis Budget Group reported a 44 cent loss.
Estimates Jump
Following the earnings news, analysts quickly raised full-year estimates. The Zacks Consensus Estimate for 2010 is up 15 cents to 78 cents.
Next year’s average projection is now $1.20, up 5 cents. The growth rates are exponential following a 4 cent loss in 2009.
Good Value as Well
Shares of CAR are going for about 14 times forward earnings. The price to sales ratio is coming in around 0.23 times. Both metrics are ahead of the industry average. However, its price to book ratio of more than 5 times will likely keep traditional value investors at bay.
The Chart
Avis Budget Group’s share price has dropped since the earnings news, despite opening higher on the news. The stock traded down to a level of support, which coupled with the valuation, could make a nice entry point.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service Zacks Investment Research
