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.
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).
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