Investors in car rental giant Avis Budget should drive carefully
Avis Budget is one of two car rental companies which dominates the market. Its closest peer, Hertz has endured a difficult few years as it attempts a major turnaround. By contrast, Avis has ticked along steadily, despite the challenging market. In this piece, we'll be asking whether now is the right time to consider investing in this global brand.
With summer holidays on the horizon, many of us will be planning to rent a car while we're away. Anecdotal evidence suggests the rental process triggers a sense of dread for many customers. Will we be surprised at the rental counter with an unexpected-but-essential extra fee? And will a surprise post-rental charge appear on our credit card weeks after we return home?
On the other hand, the big rental firms form a vital part of global travel infrastructure. This seems unlikely to change, even if the way in which mobility services are delivered is evolving.
The two big listed US-listed car rental operators are Avis Budget (US: CAR), which operates Avis, Budget and car-sharing firm Zipcar and Hertz Global Holdings (US: HTZ), which operates the Hertz, Dollar and Thrifty brands. Hertz is still mired in a difficult turnaround, but Avis has been delivering consistent performances in recent years. Despite this, the firm's shares have underperformed the S&P 500 by more than 20% over…
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