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Earnings Miss: Avis Budget Group, Inc. Missed EPS By 38% And Analysts Are Revising Their Forecasts
Shareholders of Avis Budget Group, Inc. (NASDAQ:CAR) will be pleased this week, given that the stock price is up 18% to US$120 following its latest quarterly results. Statutory earnings per share fell badly short of expectations, coming in at US$5.15, some 38% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$3.4b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Avis Budget Group's seven analysts are forecasting 2027 revenues to be US$11.8b, approximately in line with the last 12 months. Earnings are expected to improve, with Avis Budget Group forecast to report a statutory profit of US$6.28 per share. In the lead-up to this report, the analysts had been modelling revenues of US$11.8b and earnings per share (EPS) of US$6.29 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
View our latest analysis for Avis Budget Group
With no major changes to earnings forecasts, the consensus price target fell 5.2% to US$116, suggesting that the analysts might have previously been hoping for an earnings upgrade. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Avis Budget Group at US$140 per share, while the most bearish prices it at US$94.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Avis Budget Group shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avis Budget Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Avis Budget Group's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 1.2% growth on an annualised basis. This is compared to a historical growth rate of 3.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.2% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Avis Budget Group.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Avis Budget Group going out to 2028, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Avis Budget Group (1 is concerning!) that you should be aware of.
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