Avis Budget (CAR) to Report Q2 Earnings: What to Expect?

Leading global car rental company, Avis Budget Group Inc. CAR is scheduled to report second-quarter 2015 results on Aug 3, after the closing bell. In the last quarter, the company delivered a positive earnings surprise of 21.4%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Avis Budget’s constant expansion endeavors, multi-brand strategy, productivity and volume growth along with improved pricing enabled it to outperform the Zacks Consensus Estimate in each of the past four quarters. However, we remain cautious of its upcoming results. The company’s significant presence in global markets exposes it to the ongoing unfavorable foreign currency translations, which are expected to continue weighing 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 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 68 cents.

Zacks Rank: Avis Budget carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult. 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:

Dean Foods Company DF has an Earnings ESP of +3.85% and a Zacks Rank #2 (Buy).

Coach Inc. COH has an Earnings ESP of +3.45% and a Zacks Rank #3.

Dollar Tree Inc. DLTR has an Earnings ESP of +2.94% and a Zacks Rank #3.

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