How Risky Is Avis Budget Stock?

Shares of Avis Budget (CAR) have lost 58% over the past six months, even as the S&P 500 gained 15.7%. The latest leg of that slide, a 17.6% drop over the past month, occurred without any new results from the company. A broader market decline could compound these losses for current shareholders. So how has Avis Budget stock held up when the whole market sold off?

Avis Budget Stock Has Fallen Deeper Than The Index

Avis Budget stock has navigated 15 market shocks since 2007. The shares fell 43.0% on average across them, compared to an average decline of 15.8% for the S&P 500. The steepest plunge occurred during the 2008-2009 Global Financial Crisis, when the stock lost 97.0% alongside a 53.0% drop for the index. During the most recent event, the 2025 US Tariff Shock, the stock fell 41% while the index dropped 19.0%.

The stock eventually returned to its pre-shock high after all 15 falls, requiring a median wait of 11.2 months from the bottom. Yet seven of those recoveries took more than 12 months. The slowest rebound followed the Summer 2007 Credit Crunch and took 68.9 months.

How Much Does Avis Budget Earn And Owe?

Avis Budget posted a net loss over the last twelve months equal to 5.4% of its revenue, trailing the S&P 500 and its net margin of 13.2%. The company generated $11.8 billion of revenue during that period, an increase from $11.3 billion a year earlier. This topline growth is a recent shift, as annual revenue previously fell in each of the last three fiscal years.

The company currently retains a much smaller slice of its revenue as profit compared to past performance. Its operating margin sits at 4.8%, a sharp drop from 24% three years ago.

Debt at Avis Budget equals 748.6% of its market value, dwarfing the 21.4% for the S&P 500. This means the total debt burden of the company is significantly larger than the combined value of all its shares.

Q2 Travel Softened And Avis Budget Expects Costlier Debt

Executives noted on the July 29, 2026 call for fiscal Q2 2026 that travel demand proved softer than they had expected. Despite this weakness, adjusted EBITDA still grew from a year earlier. Overseas visitors to the U.S. were down 8% in the quarter, and the World Cup failed to deliver the travel volume management had counted on. By the end of the period, the Americas fleet for Avis Budget finished down 5% from a year earlier. According to management, a 2.1% decline in rental days reflected its decision to run a smaller fleet.

Vehicle recalls added further operational strain. New recalls from three carmakers in April pushed the number of grounded vehicles to about 18,000. As of the earnings call, management estimated the direct cost of these recalls at more than $50 million for the year to date, a figure that excludes lost profit.

Every bit of spare cash is now going toward paying down debt, according to management. The leverage ratio for Avis Budget, which measures net debt against adjusted EBITDA, stood at 7.4 times as of the July 29 call. Executives stated they will not be satisfied with the reduction the company expects in 2026. Furthermore, management expects upcoming refinancing to cost 1 to 1.25 percentage points more than its current debt. In a separate development, Pentwater has agreed to pay Avis Budget $650 million in cash to settle a dispute over short-swing profits. Management plans to use part of that money to retire notes due in 2027, provided the settlement receives required court approval. Ultimately, ending 2026 with a leverage ratio below 7.4 times would demonstrate that the debt load of Avis Budget is shrinking relative to its adjusted EBITDA.

Does This Mean You Should Act On CAR?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.