Hertz cut its revenue guidance because there are too many cars

Hertz Rental Bus

Hertz shares dropped by as much as 8% in early trading on Monday after the company cut its guidance for US revenues.

In a statement ahead of the opening bell, Hertz said an excess of cars is putting downward pressure on prices for longer than it had anticipated.

It said 2016 revenues per available car day in the US would be in a range of 0% to -1.5%, compared to its earlier guidance for 1.5% to 2.5%.

Its forecast for full-year adjusted earnings per share was a range of $0.95 to $1.10, versus the average estimate for $1.04, according to Bloomberg.

CEO John Tague said in the release, “We are disappointed that the pricing pressure experienced late in 2015 further intensified in the first quarter of 2016. However, we believe that industry capacity will likely moderate as seasonal demand improves establishing the foundation for a relative improvement in pricing as we head into the peak summer season.”

It continues to expect to achieve $350 million of incremental savings this year.

Hertz shares have fallen 56% over the past year.

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