NEW YORK (TheStreet) --Shares of Hertz Global Holdings Inc. (HTZ - Get Report) are lower by -12.55% to $27.60 in pre-market trading on Wednesday, after the company announced yesterday afternoon it's pulling its full year financial guidance and is now expecting 2014 results to be "well below" its previous estimates, Reuters reports.
The car rental company originally forecast for a full year adjusted profit of $1.70 to $2 per share, on $11.4 billion to $11.7 billion in revenue.
Hertz issued a regulatory filing saying it's not expecting to reach those estimates due to operational challenges, including car recalls, higher operating expenses, and slow demand in its equipment retail business, Reuters added.
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Analysts polled by Thomson Reuters expected the company to report profit of $1.82 per share on revenue of $11.48 billion.Additionally, as a result of the company lowering it guidance, analysts at JPMorgan (JPM - Get Report) reduced its rating to "neutral" from "overweight." Separately, TheStreet Ratings team rates HERTZ GLOBAL HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation: "We rate HERTZ GLOBAL HOLDINGS INC (HTZ) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HTZ's revenue growth has slightly outpaced the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HERTZ GLOBAL HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, HERTZ GLOBAL HOLDINGS INC increased its bottom line by earning $0.76 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $0.76).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 98.4% when compared to the same quarter one year prior, rising from -$36.80 million to -$0.60 million.
- Net operating cash flow has increased to $738.00 million or 25.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.23%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: HTZ Ratings Report