NEW YORK (TheStreet) -- Shares of Hertz Global (HTZ) rose 3.32% to $28.67 in after-hours trading Thursday after the rental car company reached an agreement in principle with billionaire activist investor Carl Icahn to appoint three new board members.
Vincent J. Intrieri, Samuel Merksamer and Daniel A. Ninivaggi will join as independent directors, at which point three current directors will exit. As part of the agreement, Icahn has agreed not to run a proxy contest at Hertz's annual shareholders meeting next year and agreed to vote in favor of the company's nominees at the meeting.
Icahn disclosed an 8.48% stake in Hertz last month and announced plans to increase value for shareholders. The activist investor said one of his problems with the company was "lack of confidence in management."
Two of the new directors would be part of a five-person search committee for a permanent CEO, Hertz said in a statement.
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 several positive factors, 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, expanding profit margins and increase in stock price during the past year. 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 8.9%. 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 ($1.49 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 -2.05%.
- 48.04% is the gross profit margin for HERTZ GLOBAL HOLDINGS INC which we consider to be strong. 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 -0.02% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: HTZ Ratings Report
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