Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Will Currency Woes Hit Avis (CAR) This Earnings Season?

Leading global car rental company, Avis Budget Group Inc. CAR is scheduled to report first-quarter 2016 results on May 3, after the closing bell. In the last quarter, the company posted in-line earnings.

However, the company delivered an average positive earnings surprise of 11.1% in the trailing four quarters. Let’s see how things are shaping up for this announcement.



Factors Influencing This Quarter

Avis Budget’s earnings matched estimates in the preceding quarter, but plunged year over year. The top line also lagged the Zacks Consensus Estimate. Results were mainly hurt by the ongoing currency headwinds, soft commercial demand and difficult pricing.

Moreover, the company expects negative currency movements to linger in 2016, as is reflected by its bleak sales and bottom line outlook. The company estimates negative currency translations to impact revenues by nearly $140 million and bottom line by $0.17 per share in 2016. Also, fleet costs are anticipated to rise in 2016.

Though we appreciate the company’s expansion strategy and brand building efforts, its bleak outlook for 2016 makes us cautious about its performance in the first quarter.

Earnings Whispers

Our proven model does not conclusively project Avis Budget as likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Avis Budget has an Earnings ESP of -100.00%. That is because the Most Accurate estimate of a loss of 12 cents is wider than the Zacks Consensus Estimate of a loss of 6 cents.

Zacks Rank: Avis Budget carries a Zacks Rank #5 (Strong Sell).

As it is the company has a negative ESP, on top of that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Church & Dwight Co. Inc. CHD, scheduled to report earnings on May 5, has an Earnings ESP of +1.19% and a Zacks Rank #2 (Buy).

Home Depot Inc. HD, scheduled to report earnings on May 17, has an Earnings ESP of +1.50% and a Zacks Rank #3 (Hold).

Urban Outfitters Inc. URBN, scheduled to report earnings on May 18, has an Earnings ESP of +8.00% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AVIS BUDGET GRP (CAR): Free Stock Analysis Report
 
HOME DEPOT (HD): Free Stock Analysis Report
 
URBAN OUTFITTER (URBN): Free Stock Analysis Report
 
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research