Avis Budget Group Inc. CAR reported better-than-expected third-quarter 2020 results. The earnings beat, however, failed to impress investors as the stock declined 16.8% since the earnings release. So far this year, shares of Avis Budget have lost 5.4% compared with 18.7% decline of the industry it belongs to.
Adjusted earnings (excluding 50 cents from non-recurring items) per share of $1.13 beat the Zacks Consensus Estimate by more than 100% but fell 61.8% year over year. Total revenues of $1,534 million also surpassed the consensus estimate by 8.4% but declined 44.3% year over year due to 42% decline in rental days and 5% fall in revenues per day (excluding exchange rate effects).
Avis Budget anticipates adjusted free cash flow and adjusted EBITDA to be both positive for the fourth quarter of 2020.
Revenues by Segment
Americas segment revenues of $1,114 million declined 40% year over year. The segment contributed 72.6% to total revenues.
International segment revenues of $420 million fell 53% year over year. The segment contributed 27.4% to total revenues.
Adjusted earnings before interest, taxes, depreciation and amortization (EBIDA) was $220 million against $471 million in the prior-year quarter. The company resorted to various cost-reduction strategies and removed approximately $1 billion of costs during the third quarter, bringing the total to $2 billion year to date.
Adjusted EBITDA for Americas was $222 million against gain of $321 million in the prior-year quarter. Internationally, adjusted EBITDA was $6 million compared with a profit of $169 million in the prior-year quarter.
Balance Sheet and Cash Flow
Avis Budget exited third-quarter 2020 with cash and cash equivalents of $1.56 billion compared with $1.26 billion at the end of the prior quarter. Corporate debt was $4.2 billion compared with $3.9 billion at the end of the prior quarter.
The company generated $282 million of net cash from operating activities in the reported quarter. Adjusted free cash flow generated was $100 million and capital expenditures were $21 million in the reported quarter.
Currently, Avis Budget carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share that beat the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the guidance of $1.30-$1.40.
The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.
IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the guidance of $1.47-$1.55.
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