Avis Budget Group, Inc. (NASDAQ: CAR)

Sector: Industrials Industry: Rental & Leasing Services CIK: 0000723612
Market Cap 4.34 Bn
P/B -1.81
P/E -2.07
P/S 0.37
ROIC (Qtr) -7.69
Div Yield % 0.00
Rev 1y % (Qtr) 1.12
Total Debt (Qtr) 27.94 Bn
Debt/Equity (Qtr) -11.65
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About

Avis Budget Group, Inc., or CAR, operates in the car rental and car sharing industry, offering a range of options from car and truck rental to car sharing. The company has a significant global presence, spanning over 180 countries, making it a dominant player in the industry. Avis Budget Group's main business activities revolve around providing mobility solutions through its three primary brands: Avis, Budget, and Zipcar. The Avis brand caters to premium commercial and leisure segments, offering high-quality vehicle rental and other mobility solutions...

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Investment thesis

Bull case

  • Healthy cash reserves of 564M provide 14.84x coverage of short-term debt 38M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 3.63B provides strong 172.90x coverage of stock compensation 21M, indicating sustainable incentive practices.
  • Operating cash flow of 3.63B provides exceptional 907.75x coverage of minority interest expenses 4M, showing strong core operations.
  • Strong operating cash flow of 3.63B provides 2.53x coverage of SG&A expenses 1.44B, showing efficient operational cost management.
  • Strong free cash flow of (918M) provides 5.56x coverage of acquisition spending (165M), indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 3.63B barely covers its investment activities of (4.71B), with a coverage ratio of -0.77, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 564M provide limited coverage of acquisition spending of (165M), which is -3.42x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of (918M) provides weak coverage of capital expenditures of 4.55B, with a -0.20 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (2.63B) show weak coverage of depreciation charges of 4.07B, with a -0.65 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 3.63B provides minimal -3.89x coverage of tax expenses of (934M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Brand Breakdown of Revenue (2024)

Business Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Rental & Leasing Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 URI United Rentals, Inc. 55.62 Bn 22.30 3.45 15.35 Bn
2 FTAI FTAI Aviation Ltd. 27.80 Bn -179.72 106.00 3.45 Bn
3 AER AerCap Holdings N.V. 26.27 Bn 7.00 3.08 43.57 Bn
4 UHAL U-Haul Holding Co /NV/ 13.75 Bn 106.91 2.29 8.06 Bn
5 GATX Gatx Corp 9.00 Bn 53.16 6.81 9.03 Bn
6 R Ryder System Inc 8.88 Bn 17.80 0.70 7.65 Bn
7 AL Air Lease Corp 7.23 Bn 6.92 2.40 19.73 Bn
8 HRI Herc Holdings Inc 5.00 Bn 5,004.00 1.14 9.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.00 1.32
EV to Cash from Ops. EV/CFO 8.93 77.20
EV to Debt EV to Debt 1.16 3.45
EV to EBIT EV/EBIT -12.34 -105.66
EV to EBITDA EV/EBITDA 22.02 20.85
EV to Free Cash Flow [EV/FCF] EV/FCF -35.31 -1.38
EV to Market Cap EV to Market Cap 7.47 3.10
EV to Revenue EV/Rev 2.77 9.87
Price to Book Value [P/B] P/B -1.81 7.72
Price to Earnings [P/E] P/E -2.07 277.95
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 3.00
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 500.03
Dividend per Basic Share Div per Share (Qtr) 0.00 1.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.22
Interest Coverage Int. cover (Qtr) -6.44 -60.94
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -51.28 17.05
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -6.31 54.66
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.10
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -339.47 38.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -67.30 5.40
EBIT Growth (1y) % EBIT 1y % (Qtr) -468.30 2.84
EBT Growth (1y) % EBT 1y % (Qtr) -915.59 42.60
EPS Growth (1y) % EPS 1y % (Qtr) -621.80 243.85
FCF Growth (1y) % FCF 1y % (Qtr) -272.56 5.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -28.61 31.59
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.36 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.18 0.21
Current Ratio Curr Ratio (Qtr) 0.71 1.01
Debt to Equity Ratio Debt/Equity (Qtr) -11.65 20.57
Interest Cover Ratio Int Coverage (Qtr) -6.44 -60.94
Times Interest Earned Times Interest Earned (Qtr) -6.44 -60.94
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 12.30 35.32
EBIT Margin % EBIT Margin % (Qtr) -22.45 12.98
EBT Margin % EBT Margin % (Qtr) -25.94 3.50
Gross Margin % Gross Margin % (Qtr) 14.30 42.91
Net Profit Margin % Net Margin % (Qtr) -18.00 1.24