Avis Budget Group, Inc. (CAR) Falls on Lower Forward Guidance for 2015

Shares of Parsippany, NJ, based Avis Budget Group, Inc. (CAR) fell on Tuesday, against the backrop of a higher day in stocks overall. Avis's stock was down 11.38%, falling $5.95 per share, to close at $46.35, on volume of 14,516,782 shares. The company's third quarter earnings came in near analysts expectations, but a downward revision of 2015 full year earnings triggered the selloff.

Founded in 2006, Avis Budget Group, Inc. provides vehicle rentals and car sharing services through its major brands, including Avis, Budget and Zipcar.
The company also has a truck rental segment that provides truck rentals and related products and services to both consumers and commercial users in the US. The company operates more than 10,000 locations in 175 countries around the world, and is one of the largest vehicle rental services in the US, Europe, Australia and New Zealand. The company's stock trades on the NASDAQ.

The company reported results for its third quarter ended September 30, 2015, just after the market closed on Monday afternoon. Revenue for the quarter came in at $2.6 billion, which was right in line with analysts expectations. Adjusted net income of $206 million, or $1.98 per share, was reported, representing an increase of 4%. This was just 0.02 below analysts expectations of $2.00 per share.

The bad news on the stock however came from its forward guidance for 2015 , which was revised downward. The company revised it's earlier guidance for all of 2015, reporting that adjusted diluted earnings per share will come in at between $3.10 to $3.25 per share. This represents an increase of 5% to 10% compared to 2014, reflecting a negative impact from currency exchange rates of approximately 20 cents per share. This was a reduction from the earlier forecast of $3.15 to $3.45 per share, and below the $3.36 expected by analysts.

"Revenues and earnings grew year-over-year despite significant exchange-rate headwinds. Our growth reflected strong summer demand across Europe, lower per-unit fleet costs and benefits from our acquisitions," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "We increased our share repurchase activity in the third quarter, buying back more stock than in any single quarter in our history as an independent company. Our share repurchases highlight our confidence in our earnings, cash flow and longer-term growth prospects."

In other news, the company disclosed that it repurchased approximately 3.7 million shares of its common stock at a cost of $161 million in the third quarter. Through September 30, Avis has repurchased a total of 13.1 million shares at a cost of $627 million, since the share repurchase program began in August 2013. The company also announced that Ronald L. Nelson will retire as CEO at the end of the year. He will be succeeded by Larry D. De Shon, Avis's current President, International. His appointement will be effective January 1, 2016, though Nelson will continue to serve as the company's chairman (see link below).

Other News CAR

Avis selects its next CEO, outlines succession plan
Avis Budget Group Inc. has named Larry De Shon as the company's next chief executive officer, succeeding Ronald Nelson.

Avis Shares Could Double By Late 2017
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Published on Nov 4, 2015
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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