Hertz Global Stock To $4?
Hertz Global (HTZ) stock has jumped 36% during the past day, and is currently trading at $6.73. Our multi-factor assessment suggests that it may be time to sell HTZ stock. We have, overall, a pessimistic view of the stock, and a price of $4 may not be out of reach. We believe there is a lot to fear in HTZ stock given its overall Very Weak operating performance and financial condition. Hence, despite its Very Low valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very Low |
| What you get: | |
| Growth | Very Weak |
| Profitability | Very Weak |
| Financial Stability | Very Weak |
| Downturn Resilience | Very Weak |
| Operating Performance | Very Weak |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $2.1 Bil in market cap, Hertz Global provides vehicle rental services under multiple brands, sells vehicles, and operates car sharing and international rental businesses through company-owned, licensee, and franchisee locations.
[1] Valuation Looks Very Low
| HTZ | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 0.2 | 3.1 |
| Price-to-Earnings Ratio | -0.7 | 23.7 |
| Price-to-Free Cash Flow Ratio | -0.2 | 20.3 |
This table highlights how HTZ is valued vs broader market. For more details see: HTZ Valuation Ratios
[2] Growth Is Very Weak
- Hertz Global has seen its top line grow at an average rate of 1.3% over the last 3 years
- Its revenues have fallen -7.6% from $9.3 Bil to $8.6 Bil in the last 12 months
- Also, its quarterly revenues declined -7.1% to $2.2 Bil in the most recent quarter from $2.4 Bil a year ago.
| HTZ | S&P 500 | |
|---|---|---|
| 3-Year Average | 1.3% | 5.3% |
| Latest Twelve Months* | -7.6% | 5.6% |
| Most Recent Quarter (YoY)* | -7.1% | 6.7% |
This table highlights how HTZ is growing vs broader market. For more details see: HTZ Revenue Comparison
[3] Profitability Appears Very Weak
- HTZ last 12 month operating income was $-935 Mil representing operating margin of -10.9%
- With cash flow margin of 22.1%, it generated nearly $1.9 Bil in operating cash flow over this period
- For the same period, HTZ generated nearly $-2.5 Bil in net income, suggesting net margin of about -29.6%
| HTZ | S&P 500 | |
|---|---|---|
| Current Operating Margin | -10.9% | 18.8% |
| Current OCF Margin | 22.1% | 20.4% |
| Current Net Income Margin | -29.6% | 12.9% |
This table highlights how HTZ profitability vs broader market. For more details see: HTZ Operating Income Comparison
[4] Financial Stability Looks Very Weak
- HTZ Debt was $20 Bil at the end of the most recent quarter, while its current Market Cap is $2.1 Bil. This implies Debt-to-Equity Ratio of 1083.2%
- HTZ Cash (including cash equivalents) makes up $503 Mil of $23 Bil in total Assets. This yields a Cash-to-Assets Ratio of 2.2%
| HTZ | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 1083.2% | 20.9% |
| Current Cash-to-Assets Ratio | 2.2% | 7.0% |
[5] Downturn Resilience Is Very Weak
HTZ has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- HTZ stock fell 69.8% from a high of $26.97 on 12 November 2021 to $8.14 on 13 November 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $10.65 on 26 December 2023 , and currently trades at $6.73
| HTZ | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -69.8% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read HTZ Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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