Hertz (HTZ) Down 9% Since Last Earnings Report: Can It Rebound?

A month has passed since Hertz’s (HTZ) last earnings report. The stock has lost about 9% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hertz waiting for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Second Quarter Results

Hertz Global’s second-quarter loss (excluding 56 cents on non-recurring items) of 19 cents compared favorably with the Zacks Consensus Estimate of a loss of 29 cents and the year-ago loss of 63 cents. Results were supported by higher revenues.

Quarterly revenues of $2,389 million surpassed the Zacks Consensus Estimate of $2,315.2 million and increased 7.4% year-over-year. The winner was determined by the strength of most segments.

Segment performance

The U.S. rental car segment generated revenues of $1,628 million, up 7% year-over-year. The improvement can be attributed to increased flight volumes both at and outside airports.

Vehicle utilization improved by 100 basis points to 81% in the quarter due to efficient fleet management. Excluding the fleet dedicated to rental to transport network companies (“TNCs”), vehicle capacity increased by 3% in the reported quarter.

In the second quarter of 2018, direct vehicle operating and selling costs and general and administrative expenses (as a % of total segment revenues) increased to 70% from 67% a year earlier. Higher rental volumes and investments related to the company’s transformation initiatives resulted in increased expenses.

The international car rental segment generated revenues of USD 589 million, up 8% year over year (2% net of foreign currency impact). Total revenue per trading day (RPD) increased by 2%.

During the reported quarter, direct vehicle operating and selling costs and general and administrative expenses (as a percentage of total segment revenues) fell to 65% from 69% a year ago. Revenue from all other operations increased 6% to $172 million.

Balance sheet and cash flow

Hertz Global ended the second quarter of 2018 with cash and cash equivalents of $685 million, compared to $1,046 million at the end of the first quarter of 2018. Restricted cash at the end of the quarter was $236 million, compared to $894 million at the end of the previous quarter.

As of June 30, 2018, total debt was $17,364 million compared to $16,811 million as of March 31, 2018. The company generated $942 million of cash from operations in the first half of the year compared to $963 million in the comparable period. period a year earlier period.

How have estimates changed since then?

Over the past month, investors have witnessed an upward trend in new estimates. The consensus estimate has moved 5.82% due to these changes.

VGM results

Currently, Hertz has a good Growth Score of B, but its Momentum Score is doing slightly better, earning an A. Following the exact same path, the stock was rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s total VGM score is A. Unless you’re focused on a single strategy, this score should interest you.

Perspectives

Estimates for the stock are trending higher, and the scale of these revisions looks promising. It is worth noting that Hertz has a Zacks Rank #3 (Hold). We expect a linear return on the stock over the next few months.

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