Avis Budget Group (CAR) might be beaten down right now, but the growth rates are looking great. They reported better-than-expected results in each of the past 5 quarters and shares have a Zacks #1 Rank (Strong Buy).
Company Description
Avis Budget Group is a vehicle rental company in North America and Australia.
Surprise Profit
Analysts were expecting Avis to lose a nickel per share last quarter, so it was a nice surprise to see an 11-cent profit. On May 3 the company reported quarterly results that showed a 7% increase in revenue, bringing the top line up to $1.2 billion.
Many companies are seeing sales growth that is mostly due to inflating prices, but Avis had a 7% rise in volume. Their input costs were down, so the expanding margin led to a $7 million net income.
Analysts Like it
After Avis reported its fifth consecutive earnings surprise analysts started raising estimates. The full-year consensus for 2011 is up 22 cents, to $1.47. Forecasts for 2012 are averaging $1.69, up 14 cents.
Last year the company brought in $0.90 per share, so the expected growth rates are at 64% this year and 15% next year.
A Budget Indeed
Shares of CAR are exchanging hands at just 11 times forward estimates. The price to sales is only 0.3 times. This comes as the ROA, operating margins, and book value steadily increased over the past 3 quarters.
The Chart
If you are hunting for momentum, you may want to avert your eyes. But, if you are looking for a down on its luck stock that has some hope for turning around, CAR might be worth a look. Shares look oversold as investors have been shunning this economically-sensitive ticker. The pessimist may say not to catch a falling knife, but optimists see a good chance to get in on an beaten down value stock with a chance to turn it around.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
AVIS BUDGET GRP (CAR): Free Stock Analysis Report
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