"Avis Budget Group ( NASDAQ: CAR) delivered a sharp earnings surprise on Monday after the close, posting $10.11 in adjusted EPS that crushed consensus expectations of $8.12. Revenue also beat, reaching $3.52 billion against a $3.49 billion estimate. The stock, which closed at $155.18 before results, now faces a critical test: whether this quarter signals a genuine turnaround or another false start in a year marked by three consecutive massive earnings misses."
"What caught my attention here is the breadth of the beat. Net income surged 52% year over year to $360 million, while adjusted EBITDA climbed to $559 million from $503 million in the same quarter last year. That's meaningful leverage, and it tells a story about cost discipline. Lower fleet costs drove much of the gain, a signal that management is executing on the operational side even as pricing pressure persists in the rental market."
"The weakness last quarter is straightforward: revenue per day declined 1% year over year. That's the metric that matters most in car rental. Rental days ticked up 1%, which means Avis is moving more volume but at lower prices. In a competitive market, that's a trade-off management is willing to make, but it raises a question about pricing power going forward. If the company can't push rates higher while volumes grow, margin expansion will plateau."
Quarter results showed adjusted EPS of $10.11 versus $8.12 expected and revenue of $3.52 billion versus $3.49 billion estimate. Net income rose 52% year over year to $360 million and adjusted EBITDA increased to $559 million from $503 million. Fleet cost reductions drove much of the profitability gain. The company extended a term loan maturity to July 2032 and reported nearly $1 billion in available liquidity plus $1.9 billion in fleet funding capacity. Rental days rose 1% while revenue per day declined 1%, signaling volume growth at lower prices and raising pricing-power concerns.
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