(By Rebecca Lipman. Data from Finviz)
Until recently, car rental company Dollar Thrifty Automotive Group (DTG) was up for sale and gaining interest from competitors Hertz (HTX), Avis Budget (CAR) and Enterprise. But after Avis dropped out last week and next-in-line bidder Hertz failed to step up, the company decided it was no longer for sale.
Acquisition of Dollar Thrifty would have taken strain off of the strong price competition in the already cutthroat market. But now these four large car rental companies, which make up the majority of the market, are continuing their price war to get cars moving off of lots.
Daily Finance reports the acquisition and removal of competition might have also meant higher stock values. “Now that sector consolidation is off the table, there really isn’t a lot to rev this market higher. Analysts see all three publicly traded companies posting single-digit revenue growth this year and again in 2012.”
Factors that contribute to demand for car rentals – such as business travel and family vacations – may also be in jeopardy if the economy doesn’t recover.
Another fierce competitor that wasn’t even in the picture a few years ago is the increasingly popular car-sharing services. The poster child of that industry is Zipcar (ZIP), which rents its cars at cheap hourly rates and boasts over 605,000 members.
“Unlike traditional rental agencies that treat marked-up insurance and premium-priced gasoline as profit centres, Zipcar includes fuel and insurance with its rentals. The maths works for those living in the densely populated markets that Zipcar serves,” writes Daily Finance.
Do you think these new trends in the auto rental industry is cause for concern? To help you conduct your own analyses we list below the rental companies mentioned in this article.
Use this information as a starting point for your own analysis.
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1. Avis Budget Group, Inc. (CAR): Rental & Leasing Services Industry. Market cap of $1.23B. Provides car and truck rentals, and ancillary services to businesses and consumers in the United States and internationally. Share price as of 10/13 at $11.74. The stock has had a couple of great days, gaining 14.31% over the last week.
2. Dollar Thrifty Automotive Group Inc. (DTG): Rental & Leasing Services Industry. Market cap of $1.74B. Dollar Thrifty Automotive Group, Inc. through its subsidiaries, rents and leases vehicles through company owned and franchised stores under Dollar and the Thrifty brand names primarily in the United States and Canada. Share price as of 10/13 at $59.92. The stock is a short squeeze candidate, with a short float at 14.88% (equivalent to 7.94 days of average volume). The stock has gained 23.04% over the last year.
3. Hertz Global Holdings, Inc. (HTZ): Rental & Leasing Services Industry. Market cap of $4.47B. Engages in the car and equipment rental businesses worldwide. Share price as of 10/13 at $10.73. This is a risky stock that is significantly more volatile than the overall market (beta = 2.51). The stock has had a couple of great days, gaining 13.42% over the last week.
4. Zipcar, Inc. (ZIP): Consumer Services Industry. Market cap of $692.18M. Operates a car sharing network for its members in metropolitan areas and on university campuses in the United States, Canada, and the United Kingdom. Share price as of 10/13 at $17.73. The stock is a short squeeze candidate, with a short float at 13.59% (equivalent to 15.59 days of average volume). The stock has performed poorly over the last month, losing 15.49%.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.