NEW YORK (TheStreet) -- Avis Budget Group (CAR) posted a profit of $4 million, or 3 cents per diluted share, bouncing back from the $46 million, -43 cents per share loss it reported in first quarter 2013.
The company saw a 10% increase in revenue over the previous year during the quarter to $1.9 billion, beating analysts consensus estimates of $1.83 billion.
Shares are up slightly in aftermarket trading.
TheStreet Ratings team rates AVIS BUDGET GROUP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVIS BUDGET GROUP INC (CAR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CAR's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 8.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Road & Rail industry average. The net income increased by 39.1% when compared to the same quarter one year prior, rising from -$46.00 million to -$28.00 million.
- AVIS BUDGET GROUP INC has improved earnings per share by 39.5% 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, AVIS BUDGET GROUP INC reported lower earnings of $0.07 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $0.07).
- The debt-to-equity ratio is very high at 13.92 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CAR maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Road & Rail industry and the overall market, AVIS BUDGET GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CAR Ratings Report