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Assessing Avis Budget Group (CAR) Valuation After Weak Demand, Margin Pressure and Potential Dilution Concerns

Simply Wall St · 1d ago

Recent commentary around Avis Budget Group (CAR) is focusing on a tougher backdrop, including flat rental days, softer returns on capital, and rising odds of a potentially dilutive capital raise.

See our latest analysis for Avis Budget Group.

That backdrop helps explain why, despite a robust year to date share price return of 63.87 percent and a five year total shareholder return of 269.09 percent, the more recent 90 day share price return of negative 19.27 percent suggests momentum is fading as investors reassess execution risk and balance sheet pressure.

If this kind of volatility has you comparing options, it could be a good moment to broaden your search and explore auto manufacturers for other mobility focused ideas.

With returns still strong over longer horizons but near term demand, profitability, and balance sheet risks building, is Avis Budget Group trading at a meaningful discount to its fundamentals, or is the market already discounting future growth?

Most Popular Narrative: 5.3% Undervalued

With Avis Budget Group last closing at 131.82 dollars against a narrative fair value of 139.13 dollars, the spotlight turns to what is driving that gap.

The analysts have a consensus price target of 125.0 dollars for Avis Budget Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of 196.0 dollars, and the most bearish reporting a price target of just 87.0 dollars.

Read the complete narrative.

Curious how modest revenue growth, a sharp margin swing into profitability, and a lower than sector earnings multiple can still justify a higher fair value? The narrative joins those dots with a specific earnings bridge, an explicit path for buybacks, and a discount rate that quietly does the heavy lifting. Want to see exactly how those moving parts stack up to reach that number? Read on and test whether the story behind this valuation really adds up.

Result: Fair Value of $139.13 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative could unravel if premium offerings like Avis First fail to gain traction or if autonomous mobility partnerships underdeliver on adoption and economics.

Find out about the key risks to this Avis Budget Group narrative.

Build Your Own Avis Budget Group Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom narrative in just a few minutes: Do it your way.

A great starting point for your Avis Budget Group research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.