What: Shares of Avis Budget Group (CAR 3.40%) and Hertz Global Holdings (HTZG.Q) got crushed today, with Avis down 25% and Hertz down 15% as of 12:40 p.m. ET, after Avis reported fourth-quarter earnings alongside soft guidance.
So what: Revenue in the fourth quarter inched 1% higher to $1.9 billion. On a constant currency basis, sales would have been up 5% if it weren't for the pesky U.S. dollar and its ongoing strengthening. Adjusted earnings per share came in at $0.18. While Avis posted a bottom-line beat compared to the $0.17 per share consensus estimate, guidance left a lot to be desired.
Now what: Avis expects full-year 2016 revenue to be in the range of $8.7 billion to $8.85 billion, representing growth of 2% to 4%. Foreign currency exchange rates will continue to weigh on results, hurting revenue by approximately $140 million. Total per-unit fleet costs are also expected to rise in 2016 to between $280 and $290 per month, up from $277 in 2015. Many of the headwinds that Avis is predicting, such as soft demand, relate to the overall rental car industry, which is why Hertz is sinking alongside its peer.