Hertz Global Holdings, Inc. (HTZ) analysts are expecting big things from this Zacks #1 Rank (Strong Buy). After the last quarterly report estimates have jumped, pushing growth rates well into the double-digits.
Valuations are still solid and the fundamentals just keep getting better.
Company Description
Hertz Global Holdings is the largest rental car company with 8,500 locations in 150 countries. The company also has a sizable equipment rental business serving everyone from consumers to industrial companies.
Solid Quarter
On Apr 26 Hertz said its first quarter revenue rose 7.2% to $1.8 billion. The equipment rental revenue rose 13% to just over $268 million and accounted for about 15% of the total revenue.
Given the seasonal nature of the business, Hertz usually posts a loss in the first quarter. But this year’s $14.2 million loss was much narrower than the $49.3 million a year ago. That works out to $0.03 per share, narrower than the $0.05 loss analysts were expecting.
Pedal to the Metal
In the same press release Hertz raised guidance for each metric they provide. Analysts quickly followed suit.
This year’s Zacks Consensus Estimate jumped a dime, to $0.90 per share. Projections for 2012 are averaging $1.32, a 14-cent increase. Last year the company earned $0.52, so the expected growth rates are fantastic, at 72% and 47%, respectively.
Valuations and Fundamentals
Shares are trading at a good value, as well as great growth rates. The forward P/E is at 17 times and the price to sales is a bargain at 0.8 times.
Over the past 3 quarters the operating margin, return on assets and return on equity have all made steady improvements. Hertz has done some massive refinancing and these trends should continue.
Great Trend
Take a look at the consistent year over year growth for Hertz. Each colored line below is a particular year’s consensus estimates. That is the kind of trend that leads to long-term success.
Rising estimates, high growth rates and improving fundamentals? It looks like HTZ has a bright future.
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
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