Stocks

Avis Budget Group, Inc. Said So

Avis Budget Group provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. Avis reported earnings last week.  Avis’ reported revenues of $2.1 billion during the fourth quarter, in line with analysts’ estimates.  Earnings per share jumped 18% during the fourth quarter.  But the kicker was Avis’ Americas per-unit fleet costs declined 7% during the fourth quarter.  On the news the stock price traded almost 20% higher last Thurs.

Avis’ competitor Hertz Global Holdings, Inc. provides its vehicle rental services under the Hertz, Dollar, and Thrifty brands.  They reported earnings earlier this week.  How do you Hertz’s stock price responded to their earnings?  OK, let me give you a clue.  41% of a stock’s move is due to the major indices and 39% of a stock’s move is due to the sector.  So now, do you think Hertz’s stock price responded to their earnings?

The stock price rose more than 13% in the extended session Monday after the car-rental company reported a narrower-than-expected loss for the fourth quarter, and its revenue came in slightly ahead of expectations.  

Now I know I always talk about the Smart Money, but the Smart Money gets it wrong on occasions as well.  Just look at the bearish unusual option activity in Hertz prior to the earnings announcement.

In this situation, if one wanted to be on the right side of the trade, all they had to do was listen to Avis because Avis said so. Nevertheless, the chart suggest upside is limited based on the descending channel.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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