Trade-Ideas: Avis Budget Group (CAR) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Avis Budget Group ( CAR) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Avis Budget Group as such a stock due to the following factors:

  • CAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.9 million.
  • CAR is up 4.1% today from today's close.

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More details on CAR:

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. The company has three segments: North America, International, and Truck Rental. CAR has a PE ratio of 92.1. Currently there are 3 analysts that rate Avis Budget Group a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Avis Budget Group has been 1.3 million shares per day over the past 30 days. Avis Budget Group has a market cap of $5.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.82 and a short float of 16.4% with 14.17 days to cover. Shares are up 41% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Avis Budget Group as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth 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 ratings report include:
  • 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 108.7% when compared to the same quarter one year prior, rising from -$46.00 million to $4.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 10.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AVIS BUDGET GROUP INC reported significant earnings per share improvement 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 ($2.87 versus $0.07).
  • The debt-to-equity ratio is very high at 16.64 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 0.80, 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. When compared to other companies in the Road & Rail industry and the overall market, AVIS BUDGET GROUP INC's return on equity is below that of both the industry average and the S&P 500.

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