Market Overview

Hertz Jumps on Solid Q4 Results and Strong Guidance

Car rental giant Hertz Global Holdings (NYSE: HTZ), which agreed to acquire Dollar Thrifty for $87.50 per share in a $2.3 billion all-cash deal last August, released its fiscal fourth-quarter earnings results on Monday prior to the opening bell.

The company reported a loss for the period on charges related to the Dollar Thrifty acquisition, but adjusted earnings and revenue were above Street consensus. Hertz also provided upbeat guidance for the full-year 2013, triggering a rally in the stock on Monday. At last check, the stock was trading up roughly six percent to $19.84.

"I'm pleased that Hertz once again delivered record fourth quarter and full year financial performance due to sustained operational excellence, improving pricing during the fourth quarter and the positive impact of strategic investments, including the acquisition of Dollar Thrifty Automotive Group," Chairman and CEO Mark Frissora said in a statement.

For the quarter, the company reported a net loss of $36.4 million or $0.09 per share, compared to income of $47.1 million or $0.11 per share, in last year's fourth-quarter.

On an adjusted basis, net income was $140.9 million or $0.33 per share. This beat analysts' consensus EPS estimates of $0.31 by two cents.

Revenue in the period was up 15.1 percent to $2.32 billion compared to $2.01 billion last year. This beat Wall Street consensus revenue estimates of $2.24 billion.

For fiscal 2012, Hertz reported adjusted earnings of $595.0 million or $1.33 per share, compared to $429.6 million or $0.97 per share, in fiscal 2011. Revenue grew to $9.02 billion from $8.30 billion. This compared to analysts' consensus EPS estimates of $1.33 per share on revenue of $8.99 billion for fiscal 2012.

For fiscal 2013, Hertz guided for adjusted EPS of $1.82 to $1.92 on revenue of $10.85 billion to $10.95 billion. This is above current Street consensus of $1.78 per share on revenue of $10.81 billion.

The car rental business has consolidated considerably recently as Avis Budget Group (NASDAQ: CAR) announced it was acquiring Zipcar (NASDAQ: ZIP) in January. Currently, the rental car market is divided between Hertz, Avis Budget, and privately-held Enterprise.

The strong results from Hertz have also helped Avis shares on Monday, with the stock last trading up around 2 percent to $24.08.

Surprisingly, however, hotel stocks have not reacted to the upbeat Q4 results and guidance from Hertz. Although strength in the rental car market is a good sign for companies such as Starwood Hotels (NYSE: HOT), Hyatt (NYSE: H), and Wyndham Worldwide (NYSE: WYN), all of those stocks are trading lower on Monday.

Posted-In: Earnings Long Ideas News Guidance M&A Intraday Update Movers Trading Ideas Best of Benzinga

 

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