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Ouch. Here's Why Hertz Global Holdings, Inc. Stock Plunged Tuesday.

By Daniel Sparks – May 9, 2017 at 7:46AM

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Poor used car residual values are weighing on Hertz' bottom line.

What happened

Shares of rental car company Hertz (HTZG.Q) fell as much as 21% on Tuesday, following the company's first-quarter earnings release Monday afternoon. The stock is down about 14% at the time of this writing.

So what

While Hertz' revenue of $1.92 billion during its first quarter came in ahead of a consensus analyst estimate for revenue of about $1.75 billion, the company's adjusted loss was much wider than expected. Hertz reported an adjusted loss of $134 million, or $1.61 per share. On average, analysts were expecting a loss per share of $0.85.

Chalkboard sketch of a stock price falling.

Image source: Getty Images.

Highlighting the company's declining business, these results compare to revenue of $1.98 billion and an adjusted loss per share of $0.79 loss per share in the year-ago quarter.

Hertz CEO Kathryn Marinello, who was recently elected to help the company in its turnaround, cited poor used car residual values as a primary headwind the company is facing.

Now what

Despite the quarter's worse-than-expected performance, Marinello said the company is "executing on a turnaround plan" and that the company's "commitment in investing in its business remains steadfast."

Marinello's goal with the company's turnaround effort is to strengthen Hertz' business and drive consistent and sustainable growth. To do this, Marinello is focusing on "fleet quality, the customer experience, brand development and systems transformation."

But Marinello warned investors that the company's performance "may continue to be uneven" as these changes will take time to be regularly reflected in Hertz' performance.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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