Zipcar, the leading car-sharing network and subsidiary of vehicle rental & leasing services provider Avis Budget Group, Inc. CAR, recently forayed into the Nordic countries by launching its services in Reykjavik, Iceland. The strategic move is part of the international expansion plans of the company, whereby it aims to extend its presence across the world.
Reykjavik Launch
Reykjavik, the capital of Iceland, has a high level of car ownership in the world with a car for every 1.5 inhabitant of the city, per the World Health Organization’s Global Status Report on Road Safety 2015. In order to reduce pollution from such a huge number of cars, the government has set the target of becoming the world’s first carbon-neutral city by 2040 by encouraging people to use more of public transport facilities, cycling or even walking. This gives Zipcar an ideal platform to capitalize on the huge revenue generating potential of this region.
Zipcar services can be easily availed through prior booking facilities through the mobile app and can be chosen from a wide variety of car models. The reservation charges include gas and insurance cover, making it cheap and affordable compared to high cost of car ownership.
Growth Drivers
Zipcar already has significant presence in over 500 cities and towns across Europe, Asia and North America. By expanding footprint in the Nordic countries, it has widened its global network and coverage to almost all the major regions of the world.
Avis Budget, the parent firm of Zipcar, intends to aggressively increase the number of company-operated locations in fast-growing markets. The company is particularly focused on expanding its Budget brand, taking its multi-brand strategy to the next level. We think that its fundamental drivers, such as sustained productivity growth, implementation of pricing initiatives and potential revenue-generating synergies from its various acquisitions bode well for the future.
Price Performance
Avis Budget has outperformed the industry in the last three months with an average return of 67.4% compared with a gain of 6.5% for the latter. We envision strong U.S. demand trends for the company as travel volumes continue to perform well. Anticipating strong travel trends for both leisure and commercial travelers and projecting sustained expansion of these trends, we believe that Avis Budget’s various acquisitions and purchase of licensees will enhance its operational foothold in global markets.
Zacks Rank & Key Picks
Avis Budget currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include SGS SA SGSOY, RPX Corporation RPXC and SPS Commerce, Inc. SPSC, each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SGS SA has a long-term earnings growth expectation of 6%.
RPX Corporation has beaten earnings estimates thrice in the trailing four quarters with a positive surprise of 17.1%.
SPS Commerce has a long-term earnings growth expectation of 25%. It has beaten earnings estimates in each of the trailing four quarters with a positive surprise of 17%.
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