Here's Why Investors Should Hold Avis Budget in Their Portfolios Now

CAR shares have jumped 57.8% in six months as rental demand, tech partnerships and buybacks support growth despite liquidity risks.

Zacks Equity Research

3 min read

Avis Budget Group, Inc. CAR shares have jumped 57.8% in the past six months. The industry has dipped marginally, while the Zacks S&P 500 Composite has rallied 10.3% over the same period.

6-Month Share Price Performance

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The Zacks Consensus Estimate for 2026 revenues is pinned at $11.7 billion. The figure is expected to move up slightly year over year. For 2027, the consensus estimate is $11.9 billion, indicating marginal year-over-year growth.

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For EPS, the consensus mark for 2026 is pegged at $1.36, suggesting a 112.9% year-over-year upsurge. The Zacks Consensus Estimate for 2027 EPS is set at $6.35, implying a whopping rise of 366.7% from the preceding year’s reported figure.

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Factors That Augur Well for CAR’s Success

Market Expansion Supports Top-Line Growth: The North American car rental industry is expected to witness a CAGR of 8.1% through 2023 (per a Mordor Intelligence report). The industry is anticipated to see solid demand, driven by shifts in consumer behavior toward short-term vehicle access rather than ownership. With secular growth in global travel following the pandemic halt, Avis Budget is expected to benefit from increased demand for car rentals.

Partnership With Tech Giants to Enhance Customer Experience: Partnerships with Alphabet and Amazon enable voice-controlled access via Google Assistant and Amazon Alexa devices. The focus is on expanding the fleet of connected vehicles managed through the Avis mobile app, which streamlines operations, lowers costs and enables real-time inventory tracking, mileage monitoring and automated maintenance alerts.

The data generated by these vehicles, including road conditions, accident zones, weather and user preferences, is expected to become a valuable asset, with the potential for future monetization.

Shareholder-Friendly Actions: Avis Budget bought back shares worth $951 million in 2023, $70 million in 2024 and $7 million in 2025. This steady pace of buybacks despite turbulent cash flow highlights management’s confidence in the company’s long-term prospects and contributes to improved earnings per share, thereby strengthening investor morale.

Risks Faced by Avis Budget

Bleak Liquidity Profile: As of June 30, 2026, Avis Budget’s balance sheet held $558 million in cash and equivalents against a current debt of $23 million. While the cash position appears strong, its total current assets sit significantly lower than current liabilities, hinting at a weak liquidity position.

The company’s current ratio is at 0.81, substantially lower than its industry benchmark of 1.62. It depicts Avis Budget’s liquidity as weaker than its industry peers, which, alongside the metric being lower than 1, suggests that the company remains inefficient in paying off short-term obligations.

No Dividend: Avis Budget does not offer quarterly dividends despite being a mature company. Hence, the sole source of shareholder return comes from capital appreciation, which is not guaranteed. Income-seeking investors must shy away from this stock.

CAR’s Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank of #3 (Hold).

Some better-ranked stocks from the broader Zacks Transportation sector are Aercap AER and Expeditors International of Washington EXPD, currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aercap has a long-term earnings growth expectation of 13.3%. AER delivered a trailing four-quarter earnings surprise of 39.3%, on average.

Expeditors International of Washington has a long-term earnings growth expectation of 10.6%. EXPD delivered a trailing four-quarter earnings surprise of 17.2%, on average.

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