Why Avis and Hertz Stocks Fell Tuesday

MarketsMotley Fool

What happened

Shares of rental car companies Avis Budget Group (NASDAQ: CAR) and Hertz Global (NYSE: HTZ) fell as much as 14.3% and 16.4%, respectively, on Tuesday. The declines followed the release of Avis' preliminary fourth-quarter and full-year results, and some somber comments from its management about expectations for 2018.

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Investors seem to have extrapolated from Avis' press release that Hertz could be similarly impacted by negative secular trends in 2018.

At the close, Avis and Hertz stock were down 13.5% and 14.9%, respectively.

So what

For 2017, Avis now expects to report total revenue of $8.85 billion, up about 2.2% from 2016. On average, analysts were expecting 2017 revenue of $8.8 billion.

But for 2018, Avis said it expects "ongoing headwinds" to persist, including "the incremental impact of rising interest rates and other items." On a positive note, however, Avis anticipates those headwinds will be partially offset by cost cutting.

Now what

While Avis wasn't ready to provide financial guidance for 2018, management said it would do so when it releases its full-year earnings after market close on Feb. 21.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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