On Monday, Argus raised the price target for Avis Budget Group (NASDAQ:CAR) shares to $380 from $360, while reiterating a Buy rating on the stock. The firm's assessment is based on the current valuation, which are considered attractive at the near $343 price level.
Avis Budget Group's stock has experienced fluctuations over the past 52 weeks, trading in a range between $205 and $382, and is currently positioned above the midpoint of this spectrum.
The analyst from Argus noted that the stock has shown a bullish pattern with higher highs and higher lows since September 2022. This technical momentum is coupled with solid fundamentals, as the shares are trading at 15 times the projected earnings per share (EPS) for 2025. This valuation is within the historical annual average range of 10 to 20 times EPS over the past 15 years.
In addition to the EPS valuation, the stock's trailing price-to-book (P/B) multiple stands at 8.3, which is above the midpoint of the historical range of 2.5 to 9.0. The price-to-sales (P/S) multiple is at 2.5, slightly above the midpoint of the 1.0 to 3.5 range. When compared with its peer group, Avis Budget Group's shares offer a higher yield and a lower price-to-earnings (P/E) ratio.
InvestingPro Insights
The recent analysis by Argus has painted a promising picture for Avis Budget Group, but a deeper dive into the company's financials through InvestingPro data provides a more nuanced view. With a market capitalization of $3.57 billion and an adjusted P/E ratio as of Q4 2023 standing at a low 2.16, Avis Budget Group appears undervalued when compared to industry standards. This low earnings multiple may catch the eye of value investors seeking underpriced stocks with potential for appreciation.
Despite a slight revenue growth of 0.12% in the last twelve months as of Q4 2023, the company's short-term performance shows a quarterly revenue decline of 0.25%. This indicates a need to watch the company's upcoming quarterly results closely. The next earnings date is set for May 1, 2024, which will provide investors with updated insights into the company's financial health and trajectory.
InvestingPro Tips suggest that Avis Budget Group operates with a significant debt burden and is quickly burning through cash. These factors could impact the company's long-term financial stability and should be considered by investors. On a positive note, analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. For those interested in exploring further, there are 15 additional InvestingPro Tips available, which can be accessed with a subscription. To enrich your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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