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Shares of Hertz Global Holdings Slump Following Disappointing First-Quarter Results

By Daniel Miller - May 8, 2018 at 12:46PM

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The bottom line fell far short of analysts' expectations.

What happened

Shares of Hertz Global Holdings, Inc. (HTZG.Q), an automotive vehicle rental service specialist, are down 14% as of 11:30 a.m. EDT after the company announced disappointing first-quarter results.

So what

Revenue increased 8% to $2.1 billion, which was better than analysts' estimates calling for $1.97 billion. Adjusted for one-time items, Hertz posted a loss of $131 million, or $1.58 per share, which was a small improvement compared to the prior year, but analysts had expected an adjusted loss of $1.26 per share. Hertz isn't alone with its first-quarter woes, as shares of competitor Avis also declined last week after the company announced results. 

Kathryn V. Marinello, president and chief executive officer of Hertz, commented in the press release:

We entered 2018 a stronger company than one-year ago with positive underlying revenue momentum as our strategies to enhance fleet, customer service and brand value are gaining traction. At the same time, we have fortified our leadership team and are managing our assets more effectively. The early progress is motivating for our employees and being recognized by our customers. But we still have work to do, reflecting the significant opportunities in front of us, as we position our business for sustainable, long-term growth. 

Row of cars parked at a dealership lot.

Image source: Getty Images.

Now what

Investors might be losing a bit of patience with Hertz, especially as the company plans to spend roughly $120 million on new information technology, $100 million on fleet-management systems, and another $80 million on marketing in 2018, with the expectation of similar spending next year. While Hertz's business is improving -- as evidenced by its narrowing bottom-line losses compared to last year -- it's going to take some time for those investments to pay off. Expect more speed bumps along the way.

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