CAR

Avis Budget Group Inc

Consumer, Industrial/Transportation


Presented:03/02/2017
Price:$34.18
Cap:$2.99B
Current Price:$77.47
Cap:$2.76B

Presented

Date03/02/2017
Price$34.18
Market Cap$2.99B
Ent Value$15.12B
P/E Ratio19.2x
Book Value$2.57
Div Yield0%
Shares O/S87.40M
Ave Daily Vol1,823,236
Short IntN/A

Current

Price$77.47
Market Cap$2.76B
Avis Budget Group, Inc. provides a complete range of vehicle rental and car sharing services through various brands such as Avis, Budget and Zipcar. The company operates through following segments: America and International. The America segment provides and licenses the company's brands to third parties for vehicle rentals and ancillary products and services in North America, South America, Central America and the Caribbean. The International segment provides and licenses the company's brands to third parties for vehicle rentals and ancillary products and services in Europe, the Middle East, Africa, Asia, Australia and New Zealand. Avis Budget Group was founded on August 23, 2006 and is headquartered in Parsippany, NJ.

Publicly traded companies mentioned herein: Avis Budget Group Inc (CAR), Hertz Global Holdings (HTZ)

Highlights

The presenter is short shares of Avis (CAR), expecting a 30% - 40% decline in share price over the course of 2017 as both rental prices and residual value for vehicles come down. The presenter believes management guidance indicating flat pricing is unrealistic given intensifying price competition in the rental car space, and that CAR could be set to replicate Hertz’s issues. He acknowledges the perception of a “lazy short” case based on structural challenges in the face of Uber and other ride-sharing services, but notes near-term pricing headwinds are independent of this long-term issue. His model targets $20 - $25 per share assuming a 2% decrease in rental car rates, noting that CAR shares could trade down to as low as $15 if multiples compress and pricing declines more than 2%.

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Idea Discussion

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