"Not only are the conclusions about our financial health baseless, but questioning the integrity of our financial reporting is indefensible," Hertz CEO Mark Frissora notes in a press release announcing the lawsuit. "We are taking action and responding with the truth because we know that, by not responding, we shouldn't be surprised if the public believes and acts on misinformation and untruths."
The accounting-watching firm turned heads in mid-September with its naughty list. Because the study based its results on accounting and governance risk ratings, Hertz isn't happy with the implications that it had a nearly 4% chance of filing for bankruptcy over the next 12 months.
Rental car companies have been hot this year. Hertz, Avis Budget
The groundswell of optimism appears warranted. Over the past three months alone, analysts have gone from expecting Hertz to earn $0.01 a share this year and $0.11 a share come 2010, to projecting profits of $0.15 a share and $0.42 a share, respectively. Siding with bankruptcy isn't much of a wager during the bottom-line boom that Hertz is experiencing.
However, one has to wonder why Hertz filed the lawsuit in New Jersey nearly two weeks after the Audit Integrity list came out. It was no longer much of a media magnet, and Hertz -- like the other large caps in the list -- appeared ready to let its financial performance be the ultimate rebuttal.
This is still an interesting case with important implications. Hertz just needs to work on its timing.
Who do you think has a case in this lawsuit? Share your opinion in the comment box below.
Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Motley Fool Rule Breakers analytical team, seeking out the next great growth stock early in its existence. The Fool has a disclosure policy.