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TheStreet Open House

Why Hertz Global (HTZ) Stock Continues To Plunge Today

Stock quotes in this article: HTZ

NEW YORK (TheStreet) --  Shares of Hertz Global Holdings Inc. (HTZ) are falling by -9.06% to $28.70 on very heavy volume in early afternoon trading on Wednesday.

So far, 46.49 million shares of Hertz exchanged hands, as compared to its average daily volume of 7.63 million shares.

The car rental service is continuing a dip it began in pre-market trading following a regulatory filing stating the company is withdrawing its full year 2014 earnings guidance, due to operational challenges and high costs relating to the continual audit of its results, dating back to 2011, the Wall Street Journal reported.

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Hertz has postponed the filing of its second-quarter results pending completion of a review, and said it expects its full year financial results to be "well below" its previous guidance, the Journal added.

The company's previous guidance called for full year adjusted profit of $1.70 to $2 per share, on revenue between $11.4 billion and $11.7 billion.

Analysts polled by Thomson Reuters forecast a profit of $1.82 per share on $11.48 billion in revenue, for the 2014 full year.

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

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