Hertz Global Holdings Inc. HTZ, one of the leading general-use car rental brands, is slated to report its second-quarter 2015 earnings on Aug 10. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Hertz recently emerged from its ongoing financial review that lasted for over a year. In mid-July, the company reported its restated financial statements for more than two years along with the reports for the quarter ended Mar 31, 2015. The company also raised its cost savings target for 2015. Additionally, the company, which is in the process of separating its equipment rental business, provided update on its capital allocation plans, capacity enhancement and fleet refresh targets, and 2015 outlook.
Hertz now expects cost savings of $300 million for 2015, an increase of $100 million from the previous target of $200 million. The increase can be attributed to the company’s persistent efforts to minimize costs and boost operating efficiencies. Further, we appreciate the company’s fleet management efforts which aim at meeting customer needs and at the same time enhance revenue generation capabilities.
Though we support the company’s strategies, we would like to wait and see what is in store for investors when the company regularizes its quarterly reporting.
Earnings Whispers
Our proven model does not conclusively show that Hertz 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 Hertz is currently pegged at -4.35%. This is because the Most Accurate estimate stands at 22 cents, below the Zacks Consensus Estimate of 23 cents.
Zacks Rank: Hertz carries a Zacks Rank #3 (Hold), which when combined with negative ESP 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).
Foot Locker Inc. FL has an Earnings ESP of +1.45% and a Zacks Rank #2.
Dollar Tree Inc. DLTR has an Earnings ESP of +2.94% and a Zacks Rank #3.
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