Avis Budget Group Inc. Earnings: Rising Revenue Helps Margins Expand

Avis Budget Group Inc.’s (NASDAQ:CAR) loss widened in the fourth quarter, as the company’s results were dragged down by higher costs. Avis Budget Group provides car and truck rentals and ancillary services to businesses and consumers in the United States and internationally.

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Avis Budget Group Earnings Cheat Sheet for the Fourth Quarter

Results: Loss widened to $170 million ($1.62 per diluted share) from $24 million (loss of 23 cents per share) in the same quarter a year earlier.

Revenue: Rose 33% to $1.63 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Avis Budget Group Inc. reported an adjusted net loss of 14 cents per share. By that measure, the company fell short of mean estimate of 6 cents per share. Analysts were expecting revenue of $1.66 billion.

Quoting Management: “We are very proud of the results we delivered in 2011, with significant organic revenue growth and Adjusted EBITDA and earnings per share reaching record levels, excluding certain items,” said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. “Our integration of Avis Europe is progressing as planned, and we are confident that we will realize substantial benefits in 2012 from integration-related synergies and from the strategic initiatives that accelerated our organic growth in 2011.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 7.3% to $1.62 billion in the third quarter. The figure rose 9.1% in the second quarter from the year earlier and climbed 7.1% in the first quarter from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the third quarter, it topped the mark by 3 cents, and in the second quarter, it was ahead by 32 cents.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $82 million in the third quarter, a profit of $52 million in the second quarter and $7 million in the first.

Margins rose in the third quarter after falling the quarter before. Gross margin rose 1.2 percentage points to 47.4% from the quarter earlier quarter. In the second quarter, the figure rose 1.6 percentage points to 51.8% from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the first quarter of the next fiscal year is 18 cents per share, down from 22 cents ninety days ago. The average estimate hasn’t changed from $1.82 per share for the fiscal year.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com