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Why Avis Budget (CAR) Has Gained 11.4% in the Past 6 Months

Shares of Avis Budget Group, Inc. CAR have gained 11.4% in the past six-months period against the 3.5% fall of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research

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The upside was primarily driven by connected vehicles fleet expansion and strong shareholder-friendly measures.

Reasons for Upside

Avis Budget has an impressive track record of rewarding shareholders through share repurchases. In 2021, 2020 and 2019, the company bought back shares worth $1.46 billion, $119 million and $67 million, respectively. Such moves underline the company’s confidence in business and help instill investors’ confidence in the stock by positively impacting earnings per share.

CAR remains focused on expanding its connected vehicles fleet. The company's connected car program enables customers to manage their entire rental through the Avis mobile app. Expansion of connected cars fleet allows streamlining of operations and cost reduction.

It enables enhanced tracking of idle vehicles and automated processing of cars ready to rent. Also, it facilitates real-time inventory counts, mileage management and automated maintenance notification.

Moreover, the massive data generated by these vehicles related to road conditions, accident prone zones, location mapping, weather report as well as user preferences during the driving will actually be a much-prized resource for the company, which it can monetize later.

Favorable Estimate Revision

Driven by the above tailwinds, the Zacks Consensus Estimate for current-year earnings has moved up 2% to $52.75 per share in the past 60 days.

Zacks Rank and Stocks to Consider

CAR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Booz Allen Hamilton Holding Corporation BAH and The Interpublic Group of Companies, Inc. IPG.

Booz Allen carries a Zacks Rank #2 (Buy) at present. BAH has a long-term earnings growth expectation of 8.9%.

Booz Allen delivered a trailing four-quarter earnings surprise of 8.8%, on average.

Interpublic Group is currently Zacks #2 Ranked. IPG has a long-term earnings growth expectation of 3.7%.

IPG delivered a trailing four-quarter earnings surprise of 8.9%, on average.

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