Avis stock sinks as bears focus on revenue-per-day disappointment over earnings beat

Shares of Avis Budget Group Inc. took a dive Tuesday, after the car rental company reported upbeat fourth-quarter earnings, but investors focused instead on disappointing revenue-per-day and rental-fleet metrics. The stock sank 11.6% in midday trading, on volume that was already close to triple the full-day average. That put the stock on track to suffer the biggest one-day selloff since it tumbled 14.8% on Nov. 9.

The stock’s reaction to fourth-quarter results was in stark contrast to the reaction to the third-quarter report, when it rocketed 108.3% to $357.17 on Nov. 2 to garner “meme-stock” status. Since then, the stock has lost a little more than half its value.

Avis reported late Monday that it swung to net income of $382 million, or $6.63 a share, from a loss of $90 million, or $1.29 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $7.08 beat the FactSet consensus of $6.15. Revenue grew 89.6% to $2.57 billion, above the FactSet consensus of $2.34 billion, with Americas revenue surging 104.1% to $2.10 billion and international revenue climbing 43.9% to $469 million. That marked the ninth-straight quarter that Avis beat Wall Street projections for both bottom- and top-line results.

Avis also reported revenue per day (RPD) for the quarter that rose 26.1% from a year ago to $74.92, but dropped 9.9% from $83.15 in the sequential third quarter. The average rental fleet in the Americas increased 40.1% from last year, and was up 0.2% from the third quarter to 435,403, while per-unit fleet costs per month fell 21.3% from last year but increased 18.9% sequentially to $170.

Morgan Stanley analyst Bill Kovanis said that while earnings showed strength and fleet costs were lower, he believes bears are focusing on RPD that came in shy of $75, which he said was below Wall Street projections of $78.



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