Zipcar's Sustainable Growth

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Zipcar reported earnings recently, and we learned that profitability continued to trend upward. The company said it expects net income to finish the year between $3 million and $7 million. Sadly for shareholders, the stock got crushed nonetheless. Investors apparently were expecting more growth and the company seemed to fall short of those expectations. Despite that setback, David likes how this story is playing out, and is committed to holding this stock in our 10-Bagger portfolio for the long term.

Although we always invest for the long term at the Fool, companies have a lot riding each time they report earnings. Earnings season can propel your favorite stocks to new heights or sink them like the Titanic. Fortunately, the Fool recently identified five stocks we think are poised to win as they report their first-quarter earnings this month -- and for years into the future: "5 Stocks Investors Need to Watch This Earnings Season." The report won't be available forever, so we invite you to enjoy a free copy today. You can click here to access your report -- it's totally free.

David Meier owns shares of Zipcar. John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford, Hertz Global Holdings, and Zipcar. Motley Fool newsletter services recommend Ford, General Motors Company, and Zipcar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 02, 2012, at 3:20 PM, dbtuner wrote:

    If they are as profitable as they say, their PE would be 100. Why would I want to own a company growing at 20% with a PE of 100?

    Enough with the pumping from MF.

  • Report this Comment On May 03, 2012, at 12:54 PM, TwinMount wrote:

    DBTUNER - You are making some assumptions that may not apply here. I am not sure that this is the case at ZIP but you should consider the following.

    Firstly, a game changing technology company with little capital requirements can grow very rapidly, but a capital intensive company needs to control costs and you will find that if it is very successful it will grow in large quantum leaps when demand outstrips supply.

    Secondly, even if customer growth is 20% profits can grow much more rapidly as the company benefits from economies of scale. ZIP in particular has a large portion of its assets in Goodwill, which won't need to be replicated to attract more members.

  • Report this Comment On May 03, 2012, at 2:59 PM, dbtuner wrote:

    I've been bashing this company the past 4 months and it is down from $16 to a new low of just above $11. I think I've been spot on

    You are WRONG that ZIP has little capital requirements. Buying and leasing cars is very capital intensive.

    ZIP will be BK in 18 months. Hertz is rolling out their car sharing to all 350,000 cars in 18 months and Avis will do so as well. Neither charge an annual fee. Fees make up 18% of ZIPs revenue.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1876186, ~/Articles/ArticleHandler.aspx, 11/27/2014 9:59:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement