Hertz $HTZ as you all probably know is a leading rental car company, which has emerged out of bankruptcy. During Covid, Hertz received lots of attention from Wallstreetbets, with many earning fortunes on their bets.
Recently, Hertz stock has experienced a deep decline in share price by about -50% due to EV resale value and repair costs hitting earnings a bit. Interstingly. earnings have not declined by the same margin as share price from EV market reaction.
Despite the massive decline in Hertz share price, Hertz last quarter recorded record revenue of $2.7 billion, and Hertz rental demand remains strong and stable, according to the CEO, while Hertz continues to remain profitable, unlike many low cost airlines. Travel demand is strong with cruise earnings suggest so, as do the airlines with oil prices dropping. The airline industry has seen a couple of mergers/acquisitions – ($SAVE & $JBLU) ($HA & $ALK), as companies take advantage of lower share prices to acquire counterparts for strategic purposes.
At around a 3 PE, $HTZ is attractively priced for potentially another company to acquire it, for example $UBER. Hertz is currently partnered with Uber and Lyft to streamline the process for Uber and Lyft drivers to rent vehicles for ride share purposes. No wonder insiders have accumulated close to 2 million shares in the past 3 months at the current valuation.
To put it short, $HTZ stock valuation presents a unique set up for a nice arbitrage opportunity to take advantage of their low share price, with competitiors like AvisBudget – $CAR with more than double the PE. As it stands, Hertz is an underdog and ignored by the market, so now is the time for Wallstreetbets to look into it!
This is not financial advice, please do your own due diligence 🙂
Leave a Reply