Can This Number Push Avis Budget Stock Higher?

Fleet utilization stands out as a critical metric at Avis Budget (CAR), and buyers of the stock may be betting on this share of its fleet out on rent. Rental companies typically expand by acquiring more vehicles, yet Avis deliberately opted to operate fewer. Over the last twelve months, the company lost money. Meanwhile, its stock lost 72% in six months, compared to a 14.0% gain for the S&P 500. A busier fleet alongside a financial loss and a falling stock presents a clear contradiction. So, how hard is Avis working its smaller fleet?

Avis Is Renting Out More Of A Smaller Fleet

Avis operated an Americas fleet in the second quarter of 2026 that was 5.4% smaller than a year earlier, a reduction the company made on purpose. During its second-quarter call in July, management stated it prioritized profit and returns over rental days and market share. This marked a shift in strategy. Originally, Avis intended to expand its fleet to prepare for the World Cup and a stronger summer travel season.

The vehicles Avis kept ended up busier. Utilization in the Americas reached 73.2%, setting the highest second-quarter level in the company’s history.

Profit climbed even as sales dropped. Adjusted EBITDA in the Americas grew 7.7% while revenue declined 1.9%. Avis generated higher earnings in the Americas from a smaller pool of cars. However, management noted that elevated vehicle sales cut depreciation to $301 per vehicle in the quarter, below the roughly $320 it expects under a normal sales pattern.

Can A Fuller Fleet Help Avis Pay Down Debt?

A fuller fleet can help if profit continues to grow, an important dynamic given the substantial debt Avis carries. The company holds debt equal to 785.4% of its market value, compared with 20.6% for the S&P 500.

When management reported in July, the company’s net corporate leverage ratio, representing its net corporate debt measured against adjusted EBITDA, stood at 7.4 times. When profit increases, this ratio falls even before the company repays any debt. Management expects to lower the ratio by the end of 2026. Furthermore, executives stated that every bit of excess cash flow is going toward debt repayment.

Avis is not relying solely on rentals to manage its balance sheet. The company has received $650 million in cash in October 2026 from a legal settlement with Pentwater over short-swing profits, after court approval. This money does not come from renting cars, and Avis plans to use part of it to retire its remaining 2027 notes. Even so, management expects refinancing to cost more than its current debt does.

What Does Avis’s Utilization Number Leave Out?

The utilization metric leaves out demand. Utilization rises either when a company rents out more cars or when it simply owns fewer, and Avis owned fewer. Rental days in the Americas fell 2.1% in the second quarter, and management reported that overseas visitors to the U.S. were down 8%.

Avis’s International business posted a weaker quarter. Adjusted EBITDA in this segment declined 11% from a year earlier, and management indicated that extra fleet supply in several international markets put pressure on prices.

In July, management projected the Americas fleet would stay smaller by a similar amount in the third quarter. Executives also expected adjusted EBITDA to grow from a year earlier, noting that this outlook did not depend on a broad recovery in demand. The third quarter has since ended, and its results remain pending. So far, the gain is in the Americas only, and the lower leverage Avis expects is still a forecast. Moving forward, Americas utilization and adjusted EBITDA are the numbers to watch when Avis reports its third quarter, followed by the leverage ratio at the end of 2026.

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.