×

Hertz shares plunge 18% after first-quarter loss nearly doubles Wall Street estimate

  • Hertz reported an earnings loss, excluding items, of $1.61 per share on sales of $1.92 billion.
  • The Street was anticipating Hertz to post a much smaller loss for the quarter of 91 cents on better sales of $1.94 billion, according to Thomson Reuters.
  • Hertz has struggled to get quality resale prices for its old vehicles as U.S. used-car values have fallen.
Hertz
Getty Images

Hertz Global stock tumbled Tuesday, a day after the car rental company reported a bigger-than-expected earnings loss and revenue that fell below analysts' estimates.

Lower rental prices and lower resale value for its used vehicles crimped the earnings report.

Shares of the stock closed down more than 14 percent during Tuesday, as investors digested the weak quarterly report and lack of future guidance from management.

After the bell on Monday the company reported a first quarter earnings loss, excluding items, of $1.61 per share on sales of $1.92 billion. The Street was anticipating Hertz to post a much smaller loss for the quarter of 91 cents on better sales of $1.94 billion, according to Thomson Reuters.

The company's net loss from continuing operations widened to $223 million during the period, from just $52 million a year ago. Hertz also booked an impairment charge of $30 million in the quarter.

Hertz will likely continue to struggle to get better resale values for its cars so long as U.S. used-car prices continue to fall, as more and more vehicles return to the market following their leases' end.

Used cars and trucks price index

Source: U.S. Bureau of Labor Statistics

Hertz's vehicle sales volume was up 21 percent year over year, but the value is dropping. The company noted that net depreciation per vehicle was up by 15 percent.

"We are placing significant emphasis on fleet quality, the customer experience, brand development and systems transformation," CEO Kathryn Marinello said, attributing the wider losses to increased investments being made in a "turnaround" effort.

With the blessing of billionaire investor Carl Icahn, Hertz's biggest shareholder, Marinello recently replaced CEO John Tague.

The company has performed more poorly than competitors because Hertz's fleet is particularly outdated with fewer SUVs. And competition is stiffer than ever in the age of Uber and Lyft.

As of Tuesday's close, shares of Hertz have fallen more than 63 percent over the past 12 months and are down about 40 percent this year.

HTZ 12-month performance 

Source: FactSet