What: Shares of car rental company Hertz (NYSE:HTZ) slumped on Monday following the company's third-quarter earnings report. The company missed analyst estimates for both revenue and earnings, sending the stock down about 12% by 11:30 Monday morning.
So what: Hertz reported quarterly revenue of $2.98 billion, down 5% year-over-year and about $90 million shy of the average analyst estimate. U.S. car rental revenue slumped 2% year-over-year, while International car rental revenue fell 14% and equipment rental fell 3%. Adjusted for currency, International car rental revenue increased by 3% year-over-year, with equipment rental revenue rising 1%.
Non-GAAP EPS came in at $0.49, 11% higher compared to the same period last year but $0.03 short of analyst expectations. Total expenses fell by 8.5%, faster than revenue declined, allowing Hertz to grow earnings. On a GAAP basis, EPS of $0.52 represented a 63% year-over-year increase.
Now what: While Hertz missed analyst estimates, there was some good news within the company's results. Worldwide car rental fleet efficiency rose two percentage points year-over-year to 82%, while U.S. car rental fleet efficiency jumped three percentage points to 83%. This increase in efficiency means that the company's cars are sitting idle for less time, which contributed to Hertz's earnings growth during the quarter.
Hertz's guidance for the full year remains unchanged, with the company expecting adjusted EBITDA between $1.45 billion and $1.55 billion. Hertz's earnings report comes one week after rival Avis Budget Group (NASDAQ:CAR) reported its own results, with the company also missing analyst estimates for both revenue and earnings. Avis also cut its guidance for the full year, now expecting revenue to increase by just 1%, down from a prior range of 1%-3%. Both Hertz and Avis face increasing competition from ride sharing companies like Uber.
Hertz managed to grow its earnings and fleet efficiencies despite falling revenue, which was mostly due to currency effects. This good news, however, was drowned out by the revenue and earnings miss, and investors are punishing the stock as a result.
Timothy Green owns shares of Hertz Global Holdings. The Motley Fool owns shares of Hertz Global Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.