Shares of Avis Budget Group, Inc. (NASDAQ:CAR), a global provider of rental locations, mobility solutions, and car-sharing services, are popping over 22% early Thursday morning after the company released better-than-expected fourth-quarter results.
Avis turned in a strong quarter with revenue rising 5.4% to $2.16 billion, compared to the prior year, which easily topped estimates calling for $2.08 billion. Adjusted earnings per share also delivered above expectations at $0.73 per share, compared to analysts' estimates of $0.50 per share. It was a positive turnaround from the third quarter, when profits declined 11% and shares sank near a five-year low. In fact, adjusted EBITDA and revenue were fourth-quarter records.
"We had a record fourth quarter, led by significant overperformance in the Americas and the single best December I have seen in the United States in my career," said Joe Ferraro, Avis Budget Group Interim CEO, in a press release. "Adjusting our full year results to exclude exchange rate effects, we delivered Adjusted EBITDA of $800 million for 2019, at the high end of the range we provided in October."
A strong fourth quarter was exactly what the doctor ordered. Maybe more important for investors was that management noted the momentum has continued into the current quarter. Despite the solid fourth quarter and continued momentum, investors have to be honest with themselves: This is a difficult business to be in. Our world is rapidly evolving with ridesharing companies such as Uber and Lyft, and automakers such as General Motors and Ford, testing a long list of smart mobility solutions and disrupting how we travel on a daily basis. Avis has tried to offset these disruptions by partnering with these companies in some instances, and trying to lower its costs, but it has many challenges ahead if it's going to survive and thrive long-term.