Avis Budget Group, Inc. CAR is scheduled to report first-quarter 2015 results on May 4. In the last quarter, the company had delivered a positive earnings surprise of 27.8%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Though Avis Budget’s constant expansion endeavors, multi-brand strategy, productivity and volume growth coupled with improved pricing enabled it to outperform the Zacks Consensus Estimate in each of the past four quarters, we remain cautious of its upcoming results. This is because the company’s significant presence in global markets exposes it to the ongoing unfavorable foreign currency translations, which are likely to weigh on its revenue growth, adjusted EBITDA and earnings. Moreover, rising fleet costs in North America remain a concern.
Earnings Whispers
Our proven model does not conclusively show that Avis Budget is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Avis Budget is currently pegged at -46.67%. This is because the Most Accurate estimate of 8 cents stands below the Zacks Consensus Estimate of 15 cents.
Zacks Rank: Avis Budget’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
American Eagle Outfitters, Inc. AEO has an Earnings ESP of +18.18% and a Zacks Rank #1 (Strong Buy).
Best Buy Co., Inc. BBY has an Earnings ESP of +3.45% and a Zacks Rank #3.
The Home Depot, Inc. HD has an Earnings ESP of +2.61% and a Zacks Rank #3.
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