What Happened?
Shares of global car rental company Hertz (NASDAQ: HTZ) jumped 39.5% in the morning session after the company reported third-quarter financial results that significantly beat Wall Street expectations. The company posted revenue of $2.48 billion, topping estimates, and an adjusted profit of $0.12 per share, which was 83.8% higher than the consensus forecast of $0.07. This result marked a notable turnaround from a loss of $0.68 per share in the same quarter last year. Hertz also generated a strong free cash flow of $809 million, a substantial improvement from a negative $154 million a year ago. The positive results for profit and cash flow came despite a 3.8% year-over-year decline in revenue, suggesting improved operational efficiency and giving investors reason for optimism after a difficult period for the company.
The shares closed the day at $6.73, up 35.7% from previous close.
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What Is The Market Telling Us
Hertz’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. But moves this big are rare even for Hertz and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 6.2% on the news that investors reacted positively to strong earnings from its competitor, Avis Budget Group (CAR). Avis reported third-quarter results that beat Wall Street's revenue expectations, with sales up 1.1% year on year to $3.52 billion. The company's profit of $10.11 per share was also 28% above analysts' consensus estimates. The strong performance from a key player in the car rental industry appeared to create positive sentiment across the sector, lifting shares of its peers. Separately, it was reported that the Colorado Supreme Court considered a case on whether car rental companies that offer insurance policies, like Hertz, could be deemed “insurers.”.
Hertz is up 78.3% since the beginning of the year, but at $6.65 per share, it is still trading 23.1% below its 52-week high of $8.65 from April 2025. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $246.39.
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