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Why Is Avis Budget (CAR) Down 2.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Avis Budget Group (CAR). Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Avis Budget due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Avis Budget Surpasses Q3 Earnings Estimates

Avis Budget Group reported mixed third-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings of $16.78 per share beat the consensus estimate by 15.4% but plunged 22.7% year over year. Total revenues of $3.56 billion missed the consensus estimate by 0.3% but increased 0.5% year over year.

Segmental Revenues

The Americas segment’s revenues of $2.74 billion increased 1% year over year. The figure missed our estimate of $2.78 billion. The International segment’s revenues of $828 million beat our estimate of $780.3 million but declined 2% year over year.

Profitability

Adjusted EBITDA was $907 million, down 38% year over year. Adjusted EBITDA margin was 25.5% compared with 41.2% in the year-ago quarter.  Adjusted EBITDA for the Americas segment was $740 million, down 38% year over year. Internationally, adjusted EBITDA was $196 million, 33% lower than the year-ago figure.

Balance Sheet and Cash Flow

Avis Budget exited third-quarter 2023 with cash and cash equivalents of $572 million compared with $571 million at the end of the previous quarter. Corporate debt was $4.77 billion compared with $4.7 billion at the end of the previous quarter. CAR generated $1.25 billion in net cash from operating activities in the reported quarter. Adjusted free cash flow was $416 million while capital expenditures were $75 million in the reported quarter. The company repurchased 2.2 million shares for $487 million during the quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted 17.81% due to these changes.

VGM Scores

At this time, Avis Budget has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Avis Budget has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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