Earnings Preview: Avis Budget Group may report weak 1st qtr
NEW YORK—Avis Budget Group Inc. reports earnings for the fiscal first quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Rental car companies such as Avis Budget have struggled in the face of declining consumer spending on leisure travel and less business travel.
In April, rival Hertz Global Holdings Inc. reported an adjusted quarterly profit that beat Wall Street predictions, crediting cost-cutting efforts and overseas revenue.
Hertz also backed its 2008 guidance, projecting growth in both its rental car and rental equipment divisions.
BY THE NUMBERS: Analysts polled by Thomson Financial expect Avis Budget to break even on $1.37 billion in revenue.
ANALYST TAKE: "We see weakness and uncertainty -- leisure travel soft, enplanements weak, some slowing business travel," Michael Millman of Soleil Securities Group wrote in a note to investors. He rates the stock at "Hold."
"We think first-quarter results were unable to overcome a disastrous January, despite an early Easter and extra day," he added.
WHAT'S AHEAD: The first quarter, with its light vacation-related demand, is traditionally a weak one period for rental car companies. However, analysts say it is still unclear how much of an effect the current economic slowdown will eventually have on the sector's full-year results.
STOCK PERFORMANCE: Avis Budget shares fell about 18 percent during the quarter. So far this year, the company's shares are up about 5.4 percent to close Friday at $13.70.
