** charts before earnings **
** charts after earnings **
Shares of Hertz Global Holdings Inc. HTZ tanked nearly 31% in the after-hours trading session on Nov 7 as the company’s third-quarter 2016 earnings and sales lagged expectations. Further, a lowered full-year 2016 outlook due to persistent weakness in the company’s car rental business led to the slump in the stock price.
Quarterly adjusted earnings plunged 21% year over year to $1.58 a share and substantially missed the Zacks Consensus Estimate of $2.81. Results were hurt by lower-than-expected rental volumes as well as higher operating and administrative expenses. Further, a substantial depreciation adjustment for its rental vehicles in third-quarter contributed to the decline.
On a reported basis, Hertz Global posted earnings per share of 49 cents compared with $2.60 per share earned in the prior-year quarter.
Outlook
The company anticipates fourth-quarter 2016 results to bear similar impacts as the third quarter, particularly higher depreciation rate adjustments on vehicle due to lower residual values. Hertz Global has lowered its outlook for full year 2016. Further, it expects the weak trends in its car rental business to continue throughout 2016, thus impacting results.
The company remains on track to reach its cost reduction target of $350 million for 2016, despite the lag in the third quarter due to timing issues.
For 2016, the company now expects adjusted corporate EBITDA in the range of $575–$625 million compared with the previous guidance of $850–$950 million.
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