Avis Budget Group operates two of the leading global brands in the vehicle rental industry through Avis and Budget. In early May, the company rose because it expected adjusted profit in a range between USD 2.35 and USD 2.65 per share for this year. It is 50% higher than what analysts had predicted. Its main competitors are Enterprise, Hertz and Dollar Thrifty Automotive. There are in intense competition and downward pressure on prices in the vehicle rental industry, partly because of the internet.
The group has a robust operational network and strong marketing initiatives. Its strategy is to focus on franchising operations because franchisees pay royalty fees, which is a source of high margin revenue. The company can benefit from the positive outlook of the global tourism industry. Furthermore, the used car market is growing in the US. This is an opportunity for the firm because it has to sell used cars.
However, the group is very dependent on Ford and GM, which were highly impacted by the crisis. Moreover, the firm has a heavy dependence on third-party distribution channels. Besides, increasing fuel prices is a risk because consumer will pitch on cheaper solutions.
Fundamentally, Avis Budget is by far the cheapest equity in its industry. For 2012, it has a PER of 5.96x and an EV/EBITDA of 4.77x.EPS revisions had increased in April and revenue revision soared between September and October 2011. Sales are estimated to growth over the coming years. The company is highly indebted and it is the main risk. But guidance predicts a huge cutting.
Technically, the news release in early may had created a huge bullish gap. It has been totally filled. Today, the security is trading at the same level as before the announcement. The price is currently in the area of the USD 12.8 support. On a weekly basis, Avis is in a range between USD 9.7 and USD 17 for almost three years. There is also a trend line support and the stock is trading close to it. A technical rebound is appearing. If it is confirm, the security will reach the USD 17 area.
Due to graphical analysis, investors can buy the stock immediately. The target price is the USD 17.5 resistance. To avoid important losses, a stop loss will be fixed at USD 11.2.
Avis Budget Group, Inc. is a provider of mobility solutions through its three brands, Avis, Budget and Zipcar, as well as several other brands. Its brands offer a range of options, from car and truck rental to car sharing. Its segments include Americas and International. The Americas segment consists primarily of vehicle rental operations in North America, South America, Central America and the Caribbean, and operates a car sharing business in these markets. The International segment consists of vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, and operates a car sharing business in these markets. The Avis brand provides vehicle rental and other mobility solutions at price points generally above non-branded and value-branded vehicle rental companies and serves the premium commercial and leisure segments of the travel industry. Its other brands include Payless, Maggiore and Morini Rent, FranceCars, Apex, Turiscar and ACL Hire and McNicoll Hire.
AVIS BUDGET GROUP, INC. 
