What happened

Shares of Avis Budget Group Inc. (NASDAQ:CAR), a provider of automotive rental and car-sharing services, lost 11.6% on Thursday after the company reported strong first-quarter results. Avis' move lower even sparked a 9.1% sell-off in rival Hertz Global Holdings, Inc. ahead of its May 7, 2018, reporting date.

So what

Yes, you read that last sentence correctly: Shares fell despite a strong report. Revenue grew 7% to a record $2 billion during the first quarter while its net loss improved by $20 million and adjusted EBITDA improved by $29 million. Analysts had projected Avis' adjusted earnings to check in at a loss of $1.04 per share, but the company topped that, posting an adjusted loss of $0.74 per share.

"The first quarter has our year starting on a very positive note with strong demand, higher underlying pricing in the Americas, improved utilization and lower per-unit fleet costs," said Larry De Shon, Avis Budget Group president and CEO, in a press release. "With both pricing and fleet costs in the Americas having stabilized, the benefits of our strategic initiatives were clearly evident this quarter with year-over-year profitability improving significantly."

Woman holding smartphone with "Rent a Car" on display.

Image source: Getty Images.

Now what

The only negative, if you can even describe it as such, was that management guided for full-year adjusted EPS between $2.90 and $3.75 per share, which puts the midpoint of $3.325 below consensus estimates of $3.37, according to Bloomberg. It's possible some institutional investors decided to cash out after a 55% stock price increase over the past 12 months through Wednesday, despite the price-to-earnings ratio remaining cheap at roughly 10. Whatever the reason for today's decline -- and it's not unusual for the stock to pop and drop on quarterly reports -- and investors should walk away happy about the financial performance during the first quarter.

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