02-Nov-15 16:22 ET
Avis Budget misses by $0.02, reports revs in-line; guides FY15 EPS below consensus  (52.30 +2.36)
  • Reports Q3 (Sep) earnings of $1.98 per share, $0.02 worse than the Capital IQ Consensus of $2.00; revenues rose 1.4% year/year to $2.58 bln vs the $2.6 bln Capital IQ Consensus.
    • Americas- Revenue increased 2% primarily due to a 4% increase in volume and a 3% increase in ancillary revenue per rental day in constant currency. Pricing was unchanged in constant currency and declined 2% on a reported basis. Adjusted EBITDA increased 1% driven by increased rental volumes and lower per-unit fleet costs, partially offset by higher marketing expense and increased commissions.
    • International- Revenue was essentially unchanged despite a $134 million (17%) negative impact from movements in currency exchange rates compared to the prior year. Rental days increased 23%, and total revenue per rental day declined 2% in constant currency (comprised of a 6% increase in ancillary revenue per day and a 3% decline in pricing).
  • Co issues downside guidance for FY15, sees EPS of $3.10-3.25, includes 20 cent impact from FX headwinds, (Prior $3.15-3.45 included 15 cent impact from FX headwinds) vs. $3.36 Capital IQ Consensus Estimate. Co expects FY15 revenue to increase 1% y/y; Rental days are expected to increase approx 4%; Price is expected to be unchanged.
    • Adjusted EBITDA $900-925 mln (Prior $900-950 mln).
    • Per unit fleet costs will be apporox $300 per month, down 3% y/y (Prior $300-310).Total Company per-unit fleet costs are expected to be $280 to $285 per month in 2015 (Prior $280-290) , compared to $305 in 2014, with the decrease attributable both to movements in currency exchange rates and to lower per-unit fleet costs throughout the Company’s operations.

Courtesy of

This not a value trade. With guidance of 3.15 to 3.45 the value buy here will be in the 25 to 27.50 area. Based on this report and over valuation CAR has dropped from over 52 to 36.30 as of today . CAR has strong support at 35.92 with bounce potential to 41.50.

Buy between 35.75 and 36.51. Sell half or more at 38.50 and the rest at 41.00.

Good luck ladies

Dave C

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