< !DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01//EN" "http://www.w3.org/TR/html4/strict.dtd">
Dollar
Thrifty Automotive Group, Inc. (DTG)
This
car company showed strong Q3 results and beat estimates across the
board. Now with a new CEO, great rates and increasing
demand, they may be poised for another strong year after rising 53%
over the
past twelve months.
Company
Description & Developments
Unless
you’ve been living under a rock for the past couple years, you know
that
consumers have been strained and taking more “stay-cations” than
normal. There
no doubt is an itch among many of us to take a real vacation and maybe
just
maybe rent a car in the process.
Even
though
growth is still slow, Americans and corporations are spending more on
travel.
This
time around I wouldn’t expect the general populous to splurge on first
class
plane tickets and high end luxury auto rentals.
Consumers are watching their budgets and
looking for the best deals and that is where a company like Dollar
Thrifty
comes in.
Dollar
Thrifty Automotive Group, headquartered in
Oklahoma offers global automotive rental solutions in both the
traditional
corporate structure as well as franchises of their Thrifty
brand.
Their brands have been around since the mid
20th century (1965 Dollar and 1950 Thifty)
Between
their Dollar and Thrifty brands, they cover
approximately 1,575 corporate and franchised worldwide locations
including
approximately 600 in the United States and Canada. They operate in
virtually
all of the top U.S. and Canadian airport markets and are expanding
globally.
They
operate their business without any corporate
debt and a ton of liquidity. Through their partners such as American
Airlines,
United, Southwest, Orbitz, Hotwire, Travelocity and more, they are able
to
weave and combine their low cost rentals into natural travel searches
and
online bookings.
Financial
Profile
Dollar Thrifty Automotive Group is a mid cap company
that is trading at about 16.6 times trailing earnings (P/E).
Looking forward, Zacks Consensus Estimates
see Dollar Thrifty Automotive Group
P/E dropping to 15, with no change in price from these levels.
Dollar
Thrifty Automotive Group was just upgraded to
a Zacks Rank 1 Strong Buy today.
Analysts
have held their estimates steady over the
past month; however we did see upward revisions from several analysts
over the
past 90 days to the next quarter, current year and 2012 earnings
projections.
Last
quarter DTG reported sales growth of 1.84% year over year and a jump of
14.32%
over the previous quarter, so perhaps growth has been accelerating as
of
late. They are expected to earn $4.80 in
FY2011 according to the Zacks Consensus Estimate.
Earnings
Estimates
Expectations
are for Dollar Thrifty Automotive Group
to make 76 cents this quarter when they report on February 23rd.
Of the five analysts that cover Dollar Thrifty, the consensus
is for the company
to grow earnings by 13.11% in FY2011 and just slightly less (-3.00%) in
FY2012.
Dollar
Thrifty Automotive Group surprised analysts to
the upside by 7.5% last quarter, with the average earnings surprise
being a positive
12.33%. They reaffirmed their earnings
outlook in November 2011 for revenue growth of 1 to 2 percent in
FY2011.
There
is also a bit of chatter about consolidation in the industry and that
Dollar Thrifty would be the last “prize” in
the space, but I wouldn’t base my investment on that data alone.
Market
Performance & Techincals
Like most of our momentum stocks, Dollar Thrifty
Automotive Group has been strong over the past several months and is
currently trading
about $12.00 under its 52 week high of $84.27. Overall, the
patterns for DTG
are bullish. The stock remains in a
bullish channel and firmly above its 50 and 200 day moving averages of
$67.89
and $68.69 respectively.
It
is important to note that this high beta stock has been tightening its
trading
range recently and may be setting up for a big move.
Dollar
Thrifty Automotive Group has also outpaced
the S&P 500 by 51% over the past year and almost 15% over the
past 3
months, but has been basically flat against the index for the past
month.
If
the broad market turns lower, chances are that a stock like DTG will
exaggerate
those moves, same goes for the upside, so use caution if you think
markets are
due for a pullback.
Jared
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
Editor in
charge of the market-beating Zacks
Whisper Trader Service.
Be the first to comment