Hertz (HTZ) Stock Declining as Negotiations With Loxam Group Ongoing

NEW YORK (TheStreet) -- Shares of Hertz Global Holdings (HTZ) are decreasing 0.89% to $18.96 after the company said today that it was negotiating with the Loxam Group to sell its France and Spain businesses of Hertz Equipment Rental Corporation (HERC) to Loxam.

Hertz is engaged in the car and equipment rental businesses worldwide. Loxam is a leading equipment rental company in Europe.

The proposed transaction includes 60 locations in France and two in Spain, Hertz stated. The two companies are each consulting with their respective Works Councils in France.

"The potential divestiture of its France and Spain businesses would enable HERC to focus on core and specialty market expansion," according to the companies' statement.

For Loxam, the potential acquisition would increase its market share in the Paris area and the North and West of France as well as reinforce its Spanish network.

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 a number of 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 revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and notable return on equity. 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:

  • HTZ's revenue growth has slightly outpaced the industry average of 0.8%. 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.
  • 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. In addition, HERTZ GLOBAL HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of 23.58%.
  • 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HERTZ GLOBAL HOLDINGS INC increased its bottom line by earning $0.76 versus $0.54 in the prior year. For the next year, the market is expecting a contraction of 19.7% in earnings ($0.61 versus $0.76).
  • 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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