Which of These Top 3 Car Rental Stocks Has the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how the top 3 car rental stocks rank via earnings trends:

Avis Budget Group, Inc. (NYSE:CAR): Current Price $24.10

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 5,984 5,131 5,185 5,900 7,357
Diluted EPS ($) -11.04 -0.46 0.49 -0.28  2.75

Sales were essentially flat at Avis Budget until 2011, but jumped dramatically after a European acquisition in 2012. The EPS, too, improved sharply.

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Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 1,630 1,623 1,866 2,170 1,698
Diluted EPS ($) -1.41 -0.22 0.66 2.38  -0.07

Unfortunately, Avis drops out of the race due to the loss in the latest quarter in December 2012.

Zipcar Inc (NASDAQ:ZIP): Current Price $12.23

Fiscal Year 2008 2009 2010 2011
Revenue ($) in millions 105.97 131.18 186.10 241.65
Diluted EPS ($) -7.15 -2.23 -2.74 -0.24

We see a rising turnover at Zipcar year after year and are also encouraged to note that the losses are diminishing, too.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 68.06 62.90 59.13 70.81 78.23
Diluted EPS ($) 0.02 0.86 -0.08 -0.01 0.10

Zipcar has posted a nice rise in both revenue and EPS in the September 2012 quarter.  We’ll keep it on our watchlist…

Hertz Global Holdings, Inc. (NYSE:HTZ): Current Price $19.56

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 8,686 8,525 7,102 7,563 8,298
Diluted EPS ($) 0.81 -3.74 -0.35 -0.12 0.40

Revenue has risen sharply after 2009 and the huge loss per share in 2008 has transformed into a positive EPS in 2011.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 2,432 2,014 1,961 2,225 2,516
Diluted EPS ($) 0.47 0.13 -0.13 0.21 0.55

We also note that sales and EPS have jumped smartly in the June and September 2012 quarters. We like these numbers from Hertz…

Conclusion

We pick Hertz ahead of Zipcar in this ”E-Squared” investment analysis of car rental stocks because of its better profitability trend, particularly in the last two quarters.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!