Which of These Top 3 Car Rental Stocks Has the Strongest Earnings Trends?

February 19, 2013

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Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

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Here’s your Cheat Sheet to how the top 3 car rental stocks rank via earnings trends:

Avis Budget Group, Inc. (NYSE:CAR): Current Price $24.10

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	5,984	5,131	5,185	5,900	7,357
Diluted EPS ($)	-11.04	-0.46	0.49	-0.28	2.75

Sales were essentially flat at Avis Budget until 2011, but jumped dramatically after a European acquisition in 2012. The EPS, too, improved sharply.

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Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter	Dec. 31, 2011	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012
Revenue ($) in millions	1,630	1,623	1,866	2,170	1,698
Diluted EPS ($)	-1.41	-0.22	0.66	2.38	-0.07

Unfortunately, Avis drops out of the race due to the loss in the latest quarter in December 2012.

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