Categories Analysis, Industrials

Avis Budget Group (CAR) stock dips to 8-year low on future prospects

Avis Budget Group Inc. (NASDAQ: CAR) stock plunged to an 8-year low of $14.17 on Thursday as the investors were concerned about the company’s future prospects due to the travel ban arising from the coronavirus outbreak. The market analysts continued to be cautious despite the stock nearing the fair value with a 2% estimated return.

In the past few years, the car rental market has shown several significant developments. The future of the global car rental industry looks promising with opportunities in business and leisure travel industry. However, the coronavirus outbreak has remained a major concern for the industry for the near-term.

Avis Budget Group
Image for representation. Courtesy: chuttersnap on Unsplash

Under normal circumstances, the company, which provides car and truck rental services, could turn beneficial by the growing global tourism industry, increase in international air travelers, and rising income levels across the globe. However, the situation has turned critical as the virus was declared as a global pandemic by the World Health Organization.

The coronavirus has been spreading at a faster rate after infecting more than 1,100 Americans and killing 38. The travel industry has been facing immense pressure due to the European travel ban by President Donald Trump. The ban will cancel over 7,300 flights and the airline industry is facing a $100 billion economic hit.

The company’s results will be hurt by the coronavirus outbreak as more travel restrictions are being made by the governments globally. Also, the reduction in air travel, as well as weaker travel demand and tourism, continue to impact the results at least in the near-term.

Read: Redfin outlook remains bullish

For the fourth quarter, Avis Budget Group reported a jump in earnings driven by the higher benefit from income taxes and a 5% increase in revenue. The top-line was driven by a 5% increase in rental days and a 1% rise in revenue per day. The results were benefited by the significant overperformance in the Americas and strong momentum in December.

At 1:48 pm EDT, the stock is trading down 19.09% at $15.70. The shares have fallen over 54% in the past year and over 59% in the past month. It is below the 50-day moving average of $34.62 and the 200-day moving average of $31.09. The performance outlook shows a negative trend in the near-term and long-term with a bearish pattern of the stock.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

Most Popular

CCL Earnings: Carnival Corp. Q4 2024 revenue rises 10%

Carnival Corporation & plc. (NYSE: CCL) Friday reported strong revenue growth for the fourth quarter of 2024. The cruise line operator reported a profit for Q4, compared to a loss

Key metrics from Nike’s (NKE) Q2 2025 earnings results

NIKE, Inc. (NYSE: NKE) reported total revenues of $12.4 billion for the second quarter of 2025, down 8% on a reported basis and down 9% on a currency-neutral basis. Net

FDX Earnings: FedEx Q2 2025 adjusted profit increases; revenue dips

Cargo giant FedEx Corporation (NYSE: FDX), which completed an organizational restructuring recently, announced financial results for the second quarter of 2025. Second-quarter earnings, excluding one-off items, were $4.05 per share,

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top