Hertz Advances to 5-Year High on 2015 Profit Forecast
Hertz Global Holdings Inc. (HTZ), the largest publicly traded U.S. auto-rental chain, rose to its highest level in more than five years after projecting profit for 2015 that was higher than analysts’ estimates.
The shares jumped 6.9 percent to $23.41 at the close in New York, the highest price since October 2007. Hertz has advanced 44 percent this year compared with an 10 percent gain for the Standard & Poor’s 500 Index.
Hertz is benefiting from its $2.6 billion acquisition last year of Dollar Thrifty Automotive Group Inc., which solidified its position as the second-largest U.S. rental-car chain, behind closely held Enterprise Holdings Inc. Adjusted earnings per share for 2015 will be $3.10 to $3.30, the Park Ridge, New Jersey based company said today in an investor presentation posted on its website. Analysts projected $2.39 a share, the average of estimates compiled by Bloomberg.
“The 2015 plan is clearly better than most expected,” Fred Lowrance, a Nashville, Tennessee-based analyst at Avondale Partners LLC, said in an e-mail. “The Dollar Thrifty acquisition should prove to be an even bigger game-changer than expected, and the legacy rental car and equipment-rental businesses are likely to continue the positive momentum that they displayed over the last couple of years.”
Lowrance has a market outperform rating on the stock.
Revenue will increase at a compounded annual rate of 12.5 percent to 13.5 percent through 2015, compared with a September 2011 forecast of as much as 8 percent, the company said today. Hertz said it plans to use its cash to repay debt and expand the business as well as return it to shareholders.
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