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Hertz (HTZ): What's in the Cards this Earnings Season?

Hertz Global Holdings Inc. HTZ, one of the leading general-use car rental brands, is slated to report first-quarter 2016 earnings on May 9, before the opening bell. In the last quarter, the company had delivered in-line earnings.

However, the company missed the Zacks Consensus Estimate in two of the last three quarters, delivering an average negative earnings surprise of 7.1%. Let’s see how things are shaping up for this announcement.


Factors Influencing This Quarter

In early April, Hertz provided its business update, wherein it slashed its U.S. car rental (U.S. RAC) revenue forecast for the first quarter and full-year 2016. The company now anticipates lower-than-expected adjusted earnings per share in the upcoming release.

Hertz, which is on track for the planned separation of its equipment rental business by mid 2016, identified sluggish demand as well as lower pricing and excess industry capacity as the main factors behind the dreary outlook. The company revealed that the weak pricing trends of late 2015 continued to worsen in the first quarter of 2016, in turn, dragging down results.

However, the company expects the prevailing overcapacity in the industry to normalize with seasonal demand growth and the turning around the weak pricing trends. This will ultimately position the company well for the peak summer season. Consequently, we would prefer to wait and see what’s in store for Hertz in the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Hertz is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Hertz is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at a loss of 3 cents.

Zacks Rank: Hertz carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

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

The TJX Companies Inc. TJX, scheduled to report earnings on May 17, has an Earnings ESP of +1.43% and a Zacks Rank #2.

L Brands Inc. LB, scheduled to report earnings on May 18, has an Earnings ESP of +1.75% and a Zacks Rank #3.

ULTA Salon, Cosmetics & Fragrance Inc. ULTA, scheduled to report earnings on May 26, has an Earnings ESP of +0.78% and a Zacks Rank #1.

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HERTZ GLBL HLDG (HTZ): Free Stock Analysis Report
 
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L BRANDS INC (LB): Free Stock Analysis Report
 
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