Hertz (HTZ) Q4 Earnings: What’s in Store for Investors?

Zacks

Hertz Global Holdings Inc. HTZ, one of the leading general-use car rental brands, is slated to report fourth-quarter 20Array5 earnings on Mar Array, 20Array6, before the opening bell. In the last quarter, the company had delivered a negative earnings surprise of 7.6%. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

Following the completion of its financial restatement in Jul 20Array5, Hertz plans to grow through enhanced execution coupled with utmost vigilance. The company has been taking its growth plans ahead as evident from the completion of the system integration for Dollar and Thrifty brands in third-quarter 20Array5, and the appointment of senior management executives for Hertz Equipment Rental business (HERC) as it prepares for its separation next year. Also, the company has moved its corporate headquarters to Estero, FL.

Further, going by the long-term goals established in the recent investor meet, the company is positioned to gain from enhanced focus on its car rental business, where it seeks to achieve full potential through investments and initiatives. These initiatives include growing through technology, leading in cost and quality, and attracting customer loyalty while delivering top-line growth.

However, the rental industry continues to witness a slow pace of development as indicated by lower U.S. car rental volumes. This, along with foreign currency headwinds, makes us cautious about the fourth-quarter performance.

Earnings Whispers

Our proven model does not conclusively show that Hertz is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Hertz is -20.00%. This is because both the Most Accurate estimate of 4 cents is below the Zacks Consensus Estimate of 5 cents.

Zacks Rank: Hertz carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of -20.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Kroger Co. KR has an Earnings ESP of +Array.85% and a Zacks Rank #2.

Zumiez Inc. ZUMZ has an Earnings ESP of +2.08% and a Zacks Rank #2.

Abercrombie & Fitch Company ANF has an Earnings ESP of +5.2Array% and a Zacks Rank #3.

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