NEW YORK (TheStreet) --Shares of Avis Budget Group (CAR) are higher by 8.73% to $55.53 on heavy volume in early afternoon trading on Friday, after the rental car and car sharing services company's competitor Hertz Global (HTZ) said it's raising its prices by as much as $5 per day in June as it is expecting a busy travel season this summer, Bloomberg reports.
Beginning June 14 Hertz will raise its prices $20 as week at airports and $10 a week in its neighborhood locations as it anticipates "strong seasonal demand."
"What was a positive surprise was the price increase and the commentary around capacity discipline, targeting fleet growth less than demand," analyst Chris Agnew with MKM Holdings told Bloomberg.
Based in New Jersey, Avis Budget operates under the Avis, Budget, and Zipcar brands with additional brands Budget Truck, Payless, and Apex and does business in North America and internationally.
Separately, 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 multiple 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 notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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. Compared to other companies in the Road & Rail industry and the overall market, AVIS BUDGET GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $503.00 million or 28.97% 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 22.48%.
- AVIS BUDGET GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 increased its bottom line by earning $2.22 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($3.44 versus $2.22).
- CAR, with its decline in revenue, slightly underperformed the industry average of 1.8%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 23.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full analysis from the report here: CAR Ratings Report