Why Hertz Global (HTZ) Is Up Today

NEW YORK (TheStreet) -- Hertz Global  (HTZ) was rising 4.57% to $26.99 on Thursday morning after the rental car company announced a partnership with Costco  (COST).

The company announced that it had teamed with Costco to bring short-term Hertz 24/7 van rental to Costco customers. The self-drive service, available at all 25 Costco warehouses in the U.K., allows Costco members to rent a Long Wheel Base Ford Transit Van to drive their purchased items home immediately. The service starts at £13, or approximately $21.70, per hour.

"We have been growing our global van rental offering through Hertz 24/7 for over five years," said Michel Taride, Group President of Hertz International in the company's statement. "Our Hertz 24/7 service enables Costco to provide its members with an attractive and efficient van delivery service. Hertz takes care of providing and maintaining the fleet and handling all customer transactions while Costco's members can enjoy the convenience of taking their purchases home straightaway, rather than waiting for the goods to be delivered in the future." 

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 a number of 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 robust revenue growth, 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 sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.9%. Since the same quarter one year prior, revenues rose by 22.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,393.00 million or 43.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.26%.
  • Compared to its closing price of one year ago, HTZ's share price has jumped by 38.37%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • HERTZ GLOBAL HOLDINGS INC's earnings per share declined by 14.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HERTZ GLOBAL HOLDINGS INC increased its bottom line by earning $0.54 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $0.54).
  • The gross profit margin for HERTZ GLOBAL HOLDINGS INC is rather high; currently it is at 53.17%. Regardless of HTZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HTZ's net profit margin of 6.99% is significantly lower than the industry average.
  • You can view the full analysis from the report here: HTZ Ratings Report

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