NEW YORK (TheStreet) -- Shares of Avis Budget (CAR) were gaining 8% to $63.31 Tuesday following news that Glenview Capital Management took a stake in the company, and after rival car rental company Hertz (HTZ) raised its rental prices.
In a form filed with the SEC hedge fund Glenview Capital Management disclosed that it now owns about 5.4 million shares of Avis Budget, giving it a 5.12% stake in the car rental company.
Earlier Tuesday Avis Budget rival Hertz announced it will raise its rental prices due to "fleet depreciation increases, primarily related to residual value declines." The announcement helped boost shares of Hertz, and helped boost shares of Avis as well.
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TheStreet Ratings team rates AVIS BUDGET GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AVIS BUDGET GROUP INC (CAR) a BUY. This is driven by a few notable 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 compelling growth in net income, revenue growth, notable return on equity, good cash flow from operations 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:
- 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 62.7% when compared to the same quarter one year prior, rising from $118.00 million to $192.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has increased to $1,056.00 million or 21.51% when compared to the same quarter last year. In addition, AVIS BUDGET GROUP INC has also modestly surpassed the industry average cash flow growth rate of 21.29%.
- The gross profit margin for AVIS BUDGET GROUP INC is rather high; currently it is at 52.05%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CAR's net profit margin of 7.55% significantly trails the industry average.
- You can view the full analysis from the report here: CAR Ratings Report