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Avis Budget Group (CAR)
NASDAQ:CAR
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Avis Budget
(NASDAQ:CAR)
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Rating:44Neutral
Price Target:
$91.00
▼(-2.05% Downside)
Action:ReiteratedDate:02/25/26
The score is held down primarily by weak financial performance (losses, sharp 2025 revenue decline, and a structurally weak balance sheet with negative equity) and bearish technicals (price below key moving averages with negative MACD). Partially offsetting factors include resilient operating cash flow, a neutral-but-action-oriented earnings call with liquidity actions (tax-credit monetization), and a modestly positive fleet refinancing event.
Positive Factors
Operating cash flow resilience
Consistent, multi-year operating cash flow of several billion provides durable liquidity to fund fleet purchases, service debt and support operations even during cyclical demand dips. Reliable OCF reduces bankruptcy risk and underpins the company’s ability to execute fleet refreshes and refinancing plans.
Maintained structured fleet financing
Refinancing fleet-backed debt with a new ABS issue preserves essential access to vehicle-secured capital, lowering near-term rollover risk for a fleet-intensive model. Continued structured funding supports fleet scale and operational continuity, a structural necessity for rental operations.
Tangible management corrective actions & liquidity
Monetizing EV tax credits, shortening EV useful life and accelerating dispositions are structural fixes that improve liquidity, reduce residual-value exposure, and speed capital recycling. These governance and capital-allocation moves materially lower future volatility in fleet economics.
Negative Factors
Structural balance-sheet weakness
Persistent negative equity and very large debt create chronic leverage risk, limiting flexibility for refinancing or cyclical shocks. In a demand-driven rental business, this amplifies downside in downturns, raises borrowing costs and constrains strategic investment options over the medium term.
Sharp revenue decline and recent losses
A dramatic revenue contraction and multi-year shift to net losses reduces scale economies and operating leverage, pressuring margins and free-cash-flow reliability. Lower top-line durability impairs ability to cover fixed fleet costs and undermines confidence in sustained recovery without structural demand improvement.
Residual-value & depreciation volatility
Large EV write-downs and rising per-unit depreciation signal material residual-value and obsolescence risk for a fleet with rapid tech shifts. This increases earnings volatility and capital needs, forcing faster cycling or deeper discounts on disposals and weakening long-term margin predictability.
Avis Budget (CAR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.31B
Dividend YieldN/A
Average Volume (3M)717.73K
Price to Earnings (P/E)―
Beta (1Y)1.22
Revenue Growth-1.22%
EPS Growth-639.34%
CountryUS
Employees17,000
SectorIndustrials
Sector Strength72
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)-4.60
Shares Outstanding35,258,650
10 Day Avg. Volume1,167,652
30 Day Avg. Volume717,731
Financial Highlights & Ratios
PEG Ratio0.10
Price to Book (P/B)-1.44
Price to Sales (P/S)0.39
P/FCF Ratio-0.38
Enterprise Value/Market Cap10.23
Enterprise Value/Revenue2.91
Enterprise Value/Gross Profit11.56
Enterprise Value/Ebitda7.74
Forecast
1Y Price Target
$114.60Price Target Upside23.36% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)4.81
Revenue Forecast (FY)$11.93B
Avis Budget Business Overview & Revenue Model
Company DescriptionAvis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers. It operates the Avis brand, that offers vehicle rental and other mobility solutions to the premium commercial and leisure segments of the travel industry; the Budget Truck brand, a local, and one-way truck and cargo van rental businesses with a fleet of approximately 20,000 vehicles, which are rented through a network of approximately 465 dealer-operated and 385 company-operated locations that serve the consumer and light commercial sectors in the continental United States; and the Zipcar brand, a car sharing network. The company also operates various other car rental brands, such as Budget, Payless, Apex, Maggiore, MoriniRent, FranceCars, Amicoblue, Turiscar, and ACL Hire. In addition, it offers optional insurance products and coverages, such as supplemental liability, personal accident, personal effects protection, emergency sickness protection, and automobile towing protection and cargo insurance products; fuel service options, roadside assistance services, electronic toll collection services, curbside delivery, tablet rentals, access to satellite radio, portable navigation units, and child safety seat rentals; automobile towing equipment and other moving accessories, such as hand trucks, furniture pads, and moving supplies; and Business Intelligence solution, an online portal for corporate travel. Avis Budget Group, Inc. operates in approximately 10,400 locations worldwide. The company was formerly known as Cendant Corporation and changed its name to Avis Budget Group, Inc. in September 2006. Avis Budget Group, Inc. was founded in 1946 and is headquartered in Parsippany, New Jersey.
How the Company Makes MoneyAvis Budget Group generates revenue primarily through its car rental operations, which include daily, weekly, and monthly rental agreements. The company earns money by charging customers for the rental of vehicles, along with additional fees for insurance, fuel options, and GPS navigation systems. Key revenue streams include airport rentals, where they often command higher prices due to convenience, and off-airport rentals, which cater to local customers. Moreover, Avis Budget has partnerships with airlines, hotels, and travel agencies, allowing them to offer bundled services and promotional deals that attract more customers. The company's car sharing services through Zipcar also contribute to its earnings, providing an alternative revenue stream from individuals seeking short-term vehicle access without the commitment of ownership.
Avis Budget Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 04, 2026
Earnings Call Sentiment Neutral
The call mixed material near-term negatives with decisive corrective actions. Financially, Avis Budget missed prior guidance meaningfully (full-year adjusted EBITDA guided $900M vs. reported $748M) driven by an abrupt November demand shock in the Americas, RPD weakness (-3.7%), used-vehicle price volatility (Manheim -4.3% Oct→Nov), elevated depreciation per unit ($338 in Q4 versus prior expectations) and a ~ $500M EV write-down. Offsetting these challenges, management monetized EV tax credits (≈$180M cash), recorded operational improvements (utilization +0.5pp, record dispositions in January), accelerated fleet rightsizing (average fleet age <1 year by end of Q1), and laid out clear cost and capital-allocation changes — including OEM rebalancing, a leaner cost base, and continued strategic initiatives (Avis First, Waymo). Given the significant financial misses and large one-time write-downs balanced against strong corrective measures and some tangible cash/operational wins, the call reflects a neutral tone: meaningful problems acknowledged and addressed, but near-term pressure remains.Q4-2025 Updates
Positive Updates
International Business Turnaround
International segment executed a meaningful turnaround in 2025 and performed as expected in Q4, isolating the operational shortfall to the Americas.
Record Vehicle Dispositions in January
Following Q4 defleeting, the company sold a record number of vehicles in January with momentum continuing into February and elevated disposition activity expected through tax refund season (March–April).
EV Tax Credit Monetization and Cash Generation
Completed a transaction to monetize EV-related tax credits and generated approximately $180 million of cash to date, strengthening liquidity and enabling a balance-sheet reset.
Shortened EV Useful Life to Reduce Residual Risk
Revised EV economic life from 36 months to ~18 months to reduce residual value and obsolescence risk; previously depreciating these EVs at roughly $600/month, the shorter life materially lowers future exposure and accelerates capital recycling.
Fleet Age and Utilization Improvements
Average age of U.S. rental fleet expected to be less than one year old by end of Q1 2026; utilization improved ~0.5 percentage points in the Americas in 2025 despite recall headwinds.
Operational & Cost Discipline Initiatives
Management initiated a global reduction in force in January, strengthened performance management, is prioritizing utilization over fleet growth, and is conducting a business portfolio review (including Zipcar exits/restructures) to allocate capital to higher-return initiatives.
Waymo Partnership Progress
Waymo Dallas launch remains on schedule with real estate, hiring, training and compliance tracking to plan; Waymo currently offering employees fully autonomous rides in Dallas as a step toward public rollout.
Clear Strategic Response and Governance
Management provided a three-horizon plan (diagnose Q4 miss, near-term corrective actions, and long-term strategy) and committed to tighter fleet discipline, stronger OEM partner selection, and focused customer experience improvements (Avis First expansion).
Negative Updates
Large Full-Year Adjusted EBITDA Shortfall vs. Guide
Company guided to full-year adjusted EBITDA of $900 million but reported $748 million, a shortfall of approximately $152 million versus prior guidance; management noted a Q4 miss of roughly $150 million relative to October expectations.
Q4 Americas Demand Shock — Rental Days Decline
Americas rental days swung from an expected ~+3% (based on Oct guidance) to flat for the quarter after commercial rental days fell ~11% in November due to FAA/air traffic disruptions and TSA impacts.
Pricing Pressure and RPD Decline
Revenue per day (RPD) in the Americas deteriorated more than expected, finishing Q4 down 3.7% (management had modeled closer to a 2% decline).
Used-Vehicle Market Volatility and Manheim Index Drop
Manheim rental index price per vehicle declined nearly $1,000 (roughly -4.3%) from October to November, contributing to lower gains on sale and valuation marks.
Higher-Than-Expected Depreciation Per Unit
Monthly net depreciation per unit in the Americas was $338 in Q4 versus an initial October estimate slightly below $300; management guided to an elevated near-term depreciation with a Q1 DPU reset (~$400 referenced) and a path toward a low-$300s monthly run rate for the year.
EV Fleet Write-Down
Took an approximately $500 million write-down on EV fleets at year-end (management framed this as a deliberate balance-sheet reset to reduce future volatility).
Increased Insurance Reserves (PLPD)
In December the company increased personal liability and property damage (PLPD) reserves, accounting for approximately $50 million of the adjusted EBITDA miss as a conservative reset entering 2026.
Recall-Related Operational Disruption
About 14,000 vehicles remained grounded exiting Q4 due to recalls and parts constraints; recalls contributed nearly $40 million of impact in Q4 (depreciation, interest, parking expenses, before lost profits and gains on sale).
Near-Term Earnings Pressure and Wide 2026 Guidance Range
Management expects lower EBITDA in Q1 2026 due to the depreciation reset and seasonality; 2026 adjusted EBITDA guidance range is wide as the company works to narrow visibility after the Q4 shock.
Company Guidance
Management said 2026 guidance comes with a wide adjusted‑EBITDA range that will be narrowed as the year progresses and is built on a tighter‑fleet, utilization‑first plan that assumes modest Americas revenue growth; they highlighted FY2025 adjusted EBITDA of $748M versus the October guide of $900M (Q4 had been implied at ~$157M), a roughly $150M miss driven by flat rental days (vs. a +3% guide), an 11% decline in commercial rental days in November, RPD down 3.7% (vs. ~2% expected), a Manheim price drop of about $1,000 (−4.3%) Oct→Nov, and monthly net depreciation per unit in the Americas of $338 (vs. an October estimate just under $300); the Q4 bridge cited roughly $40M from lower rental days/RPD, ~$60M from higher gross depreciation and lower gains on sale, and ~ $50M from a PLPD reserve increase, plus ~14,000 recall‑grounded vehicles (recall impact ≈ $40M in Q4) and an approximately $500M EV fleet write‑down offset in part by monetizing EV tax credits ( ~$180M cash realized to date) and shortening EV useful life from 36 to ~18 months (EV depreciation moved from ≈ $600/month toward slightly north of $300/month); company expectations include elevated depreciation (~$400 headline in Q1 per slides) normalizing to the low‑$300s monthly run rate through 2026, DPU higher in Q1 then moderating, record vehicle dispositions in January and continued elevated sales into the March–April tax‑refund season.Avis Budget Financial Statement Overview
Summary
Financial performance is pressured: revenue declined sharply in 2025 and profitability swung to losses in 2024–2025. Operating cash flow remains strong and consistently positive, but free cash flow has been highly volatile. The largest risk is structural balance-sheet weakness, with persistently negative equity and high debt levels limiting flexibility.Income Statement
Results have weakened meaningfully versus the strong 2021–2023 period. Revenue has been essentially flat to down recently, with 2025 showing a sharp decline (-39.3% YoY) and 2024 slightly down as well. Profitability has also deteriorated: net margins swung from healthy positives in 2021–2023 to losses in 2024 and 2025, indicating pressure from costs, pricing, and/or asset utilization. A partial offset is that gross profit improved sharply in 2025 versus 2024, but earnings remained negative, suggesting operating and below-the-line items are still weighing on results.38
Negative
Balance Sheet
The balance sheet is the key weak point. Stockholders’ equity is negative in every year provided, which makes leverage structurally high and causes debt-to-equity to be negative (not economically meaningful, but directionally signals high leverage relative to capital). Total debt is very large (peaking around $26B in 2023–2024 and still ~$8.7B in 2025), increasing refinancing and cyclical risk in a demand-driven business. While assets are sizable, the persistent equity deficit reduces financial flexibility and can amplify volatility in downturns.20
Very Negative
Cash Flow
Cash generation is mixed but shows resilience in operating cash flow. Operating cash flow is consistently positive and strong across years (roughly $3–5B in 2021–2025), and in most years it covers net income by more than 1x when income is positive. However, free cash flow is highly volatile, with very large negatives in 2023 and 2024 (suggesting heavy fleet or capital investment needs and/or working-capital swings), followed by a strong rebound to positive free cash flow in 2025. Overall, liquidity generation from operations is a strength, but the variability in free cash flow reduces predictability.55
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 11.65B | 11.79B | 12.01B | 11.99B | 9.31B |
| Gross Profit | 2.85B | 3.00B | 3.93B | 4.77B | 3.39B |
| EBITDA | 4.38B | 2.67B | 6.43B | 7.15B | 4.74B |
| Net Income | -889.00M | -1.82B | 1.63B | 2.76B | 1.28B |
Balance Sheet | |||||
| Total Assets | 32.19B | 29.95B | 33.42B | 25.93B | 22.60B |
| Cash, Cash Equivalents and Short-Term Investments | 519.00M | 537.00M | 559.00M | 572.00M | 537.00M |
| Total Debt | 31.17B | 26.04B | 26.45B | 20.92B | 17.80B |
| Total Liabilities | 35.24B | 32.27B | 33.76B | 26.63B | 22.81B |
| Stockholders Equity | -3.13B | -2.33B | -349.00M | -703.00M | -220.00M |
Cash Flow | |||||
| Free Cash Flow | -11.98B | -6.54B | -11.63B | 576.00M | -2.59B |
| Operating Cash Flow | 3.30B | 3.52B | 3.83B | 4.71B | 3.49B |
| Investing Cash Flow | -5.16B | -2.75B | -7.35B | -4.30B | -6.31B |
| Financing Cash Flow | 1.86B | -781.00M | 3.51B | -360.00M | 2.69B |
Avis Budget Technical Analysis
Negative
92.90
Price Trends
121.29
Negative
131.35
Negative
142.60
Negative
Market Momentum
-7.56
Positive
31.52
Neutral
13.62
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAR, the sentiment is Negative. The current price of 92.9 is below the 20-day moving average (MA) of 111.98, below the 50-day MA of 121.29, and below the 200-day MA of 142.60, indicating a bearish trend. The MACD of -7.56 indicates Positive momentum. The RSI at 31.52 is Neutral, neither overbought nor oversold. The STOCH value of 13.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CAR.
Avis Budget Risk Analysis
Avis Budget disclosed 32 risk factors in its most recent earnings report. Avis Budget reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Avis Budget Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.47B | 10.32 | 18.08% | 1.72% | 3.71% | 9.14% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $8.81B | 18.83 | 16.15% | 1.75% | 1.68% | 9.91% | |
58 Neutral | $4.96B | 4,643.44 | 0.06% | 1.79% | 19.40% | -120.47% | |
51 Neutral | $4.29B | -72.51 | -5.65% | 1.44% | -3.64% | 867.62% | |
45 Neutral | $1.38B | -1.28 | -567.03% | ― | -7.36% | 62.27% | |
44 Neutral | $3.31B | -3.67 | ― | ― | -1.22% | -639.34% |
* Industrials Sector Average
CAR
Avis Budget
92.90
12.68
15.81%
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Avis Budget Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Avis Budget refinances fleet with new asset-backed notes
Positive
Jan 5, 2026
On December 30, 2025, Avis Budget’s subsidiary Interpace Funding LLC issued $965 million in alternative funding asset-backed securities secured by vehicles in the company’s U.S. fleet and related assets, structured as floating-rate Class A Notes and fixed-rate Class B and Class C Notes with a targeted two-year term and final maturity in June 2028. The following day, December 31, 2025, the company used the proceeds to fully repay $965 million of previously outstanding asset-backed variable funding notes issued by its Avis Budget Rental Car Funding (AESOP) LLC unit, effectively refinancing its fleet-backed debt and maintaining access to structured financing while potentially optimizing its capital structure and funding costs.
The most recent analyst rating on (CAR) stock is a Hold with a $142.00 price target. To see the full list of analyst forecasts on Avis Budget stock, see the CAR Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.