It has been about a month since the last earnings report for Avis Budget Group (CAR). Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Avis Budget due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Avis Budget Group, Inc. before we dive into how investors and analysts have reacted as of late.
Avis Budget Reports Q1 Loss
Avis Budget Group (CAR) posted a first-quarter 2026 loss of $8.01 per share, narrower than the year-ago loss of $14.35. Still, results missed the Zacks Consensus Estimate of a $6.82 loss per share by 17.5%.
Quarterly revenues came in at $2.53 billion, up 4.1% year over year and ahead of the consensus mark of $2.44 billion by 3.7%. Operationally, vehicle utilization reached 70.1% companywide, a first-quarter record for both segments in more than 15 years.
CAR’s Bottom Line Still Pressured by Cost Structure
CAR reported a net loss of $234 million in the quarter versus a $504 million net loss a year ago. On an adjusted basis, the company posted an Adjusted EBITDA loss of $113 million compared with an Adjusted EBITDA loss of $93 million in the prior-year period.
Expense lines remained heavy for an asset-intensive model. Vehicle depreciation and lease charges, net, totaled $664 million, while selling, general and administrative expenses were $341 million. Vehicle interest, net, rose to $229 million, reflecting the financing load tied to the fleet.
Avis Budget’s Mix Helped Revenue Despite Uneven Volumes
Avis Budget’s revenue performance reflected better pricing and a more selective approach to volume. Total rental days dipped 1.0% year over year to 39.08 million, while revenue per day excluding exchange rate effects improved 3.0% to $63.43.
Segment results stayed constructive on the top line. Americas revenues rose 2.9% to $1.96 billion, supported by improved pricing in the core U.S. rental car business. International revenues increased 8.6% to $568 million, even as the business continued to refine its revenue mix.
CAR’s Pricing Discipline and Fleet Actions Show Early Payoff
Management pointed to early progress from fleet reduction and supply discipline, with the benefits starting to appear in operational performance. In the Americas, rental days were essentially flat, while revenue per day increased 2.8%, marking the first quarter of positive pricing in that region since late 2022.
The company also leaned into fleet right-sizing as used vehicle demand came in stronger than expected. Monthly depreciation in the Americas averaged about $380 for the quarter, starting above $500 in January and improving into the mid-$300s by March. Management said it exited the quarter with its healthiest fleet position since the pandemic and a fleet that is roughly 20% younger.
Avis Budget Raised Outlook as Liquidity Remains Adequate
Avis Budget ended March 31 with $915 million of total liquidity and about $2.9 billion of additional capacity across its ABS facilities. Management cited a net corporate leverage ratio of 7.6 times and expects to reduce it to below 6 by year-end through earnings improvement and continued debt repayment.
The company also lifted its full-year outlook. Adjusted EBITDA guidance was raised to a range of $850 million to $1.0 billion. On fleet costs, the company’s outlook calls for per-unit fleet costs per month of roughly $340 in the second quarter of 2026 and about $315-$325 for full-year 2026.
CAR’s Cash Flow Improved and Capital Priorities Shift to Debt
CAR generated net cash provided by operating activities of $434 million in the quarter. Adjusted free cash flow was $80 million, a sharp improvement from an adjusted free cash flow use of $492 million in the prior-year quarter. Capital expenditures were $42 million, with the company also noting $1 million of cloud computing implementation costs included in capex.
Capital allocation is tilting more conservatively. Management emphasized a continued focus on debt repayment while funding capital expenditures aimed at operational efficiencies, cost reduction and margin expansion. The quarter also included $7 million of common stock repurchases, but the stated priority remains restoring leverage toward more normalized levels over time.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -21.54% due to these changes.
VGM Scores
At this time, Avis Budget has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Avis Budget has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Avis Budget Group, Inc. (CAR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).