BOVESPA:RENT3

Stock Analysis Report

Executive Summary

Localiza Rent a Car S.A. engages in car rental and franchising activities.

Rewards

Earnings are forecast to grow 16% per year

Earnings have grown 14.7% per year over the past 5 years

Risk Analysis

Debt is not well covered by operating cash flow

High level of non-cash earnings

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Mediocre balance sheet with limited growth.


Similar Companies

Share Price & News

How has Localiza Rent a Car's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RENT3's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

3.9%

RENT3

0.9%

BR Transportation

0.4%

BR Market


1 Year Return

69.0%

RENT3

49.8%

BR Transportation

16.1%

BR Market

Return vs Industry: RENT3 exceeded the BR Transportation industry which returned 49.8% over the past year.

Return vs Market: RENT3 exceeded the BR Market which returned 16.1% over the past year.


Shareholder returns

RENT3IndustryMarket
7 Day3.9%0.9%0.4%
30 Day11.1%1.5%-2.4%
90 Day40.3%17.5%8.5%
1 Year70.7%69.0%51.0%49.8%20.9%16.1%
3 Year385.2%368.2%354.0%334.3%73.6%54.2%
5 Year475.1%429.6%362.4%312.7%124.2%86.3%

Price Volatility Vs. Market

How volatile is Localiza Rent a Car's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Localiza Rent a Car undervalued compared to its fair value and its price relative to the market?

51.27x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: RENT3 (R$55) is trading above our estimate of fair value (R$5.39)

Significantly Below Fair Value: RENT3 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: RENT3 is poor value based on its PE Ratio (51.3x) compared to the Transportation industry average (41.5x).

PE vs Market: RENT3 is poor value based on its PE Ratio (51.3x) compared to the BR market (16.8x).


Price to Earnings Growth Ratio

PEG Ratio: RENT3 is poor value based on its PEG Ratio (3.2x)


Price to Book Ratio

PB vs Industry: RENT3 is overvalued based on its PB Ratio (7.9x) compared to the BR Transportation industry average (4.4x).


Next Steps

Future Growth

How is Localiza Rent a Car forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

16.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RENT3's forecast earnings growth (16% per year) is above the savings rate (7%).

Earnings vs Market: RENT3's earnings (16% per year) are forecast to grow slower than the BR market (17.8% per year).

High Growth Earnings: RENT3's earnings are forecast to grow, but not significantly.

Revenue vs Market: RENT3's revenue (15.3% per year) is forecast to grow faster than the BR market (9.9% per year).

High Growth Revenue: RENT3's revenue (15.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RENT3's Return on Equity is forecast to be low in 3 years time (19.6%).


Next Steps

Past Performance

How has Localiza Rent a Car performed over the past 5 years?

14.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RENT3 has a high level of non-cash earnings.

Growing Profit Margin: RENT3's current net profit margins (8.1%) are lower than last year (8.2%).


Past Earnings Growth Analysis

Earnings Trend: RENT3's earnings have grown by 14.7% per year over the past 5 years.

Accelerating Growth: RENT3's earnings growth over the past year (28.9%) exceeds its 5-year average (14.7% per year).

Earnings vs Industry: RENT3 earnings growth over the past year (28.9%) underperformed the Transportation industry 103%.


Return on Equity

High ROE: RENT3's Return on Equity (14.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Localiza Rent a Car's financial position?


Financial Position Analysis

Short Term Liabilities: RENT3's short term assets (R$3.5B) exceed its short term liabilities (R$3.3B).

Long Term Liabilities: RENT3's short term assets (R$3.5B) do not cover its long term liabilities (R$8.5B).


Debt to Equity History and Analysis

Debt Level: RENT3's debt to equity ratio (146.6%) is considered high.

Reducing Debt: RENT3's debt to equity ratio has reduced from 149.4% to 146.6% over the past 5 years.

Debt Coverage: RENT3's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: RENT3's interest payments on its debt are well covered by EBIT (3.6x coverage).


Balance Sheet

Inventory Level: RENT3 has a low level of unsold assets or inventory.

Debt Coverage by Assets: RENT3's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

What is Localiza Rent a Car's current dividend yield, its reliability and sustainability?

0.47%

Current Dividend Yield


Dividend Yield vs Market

company0.5%marketbottom25%1.2%markettop25%4.6%industryaverage0.8%forecastin3Years1.1%

Current dividend yield vs market & industry

Notable Dividend: RENT3's dividend (0.47%) isn’t notable compared to the bottom 25% of dividend payers in the BR market (1.19%).

High Dividend: RENT3's dividend (0.47%) is low compared to the top 25% of dividend payers in the BR market (4.57%).


Stability and Growth of Payments

Stable Dividend: RENT3 is not paying a notable dividend for the BR market, therefore no need to check if payments are stable.

Growing Dividend: RENT3 is not paying a notable dividend for the BR market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: RENT3 is not paying a notable dividend for the BR market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of RENT3's dividend in 3 years as they are not forecast to pay a notable one for the BR market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average board tenure


CEO

Eugênio Mattar (66yo)

0

Mr. Eugênio Pacelli Mattar serves as the Chief Executive Officer at Localiza Rent a Car S.A. Mr. Mattar serves as a Vice President of Total Fleet S.A., Localiza Franchising S.A. and Prime Prestadora de Ser ...


Board Members

NamePositionTenureCompensationOwnership
Eugênio Mattar
CEO & Executive Director0yrsno data5.3% R$2.2b
Oscar De Bernardes Neto
Independent Chairman0yrsno datano data
Roberto Mendes
Independent Director1.8yrsno datano data
Aristides de Azevedo Newton
Member of Fiscal Council0yrsno datano data
Marco Antônio Guimarães
Member of Fiscal Council0yrsno datano data
Jose Gallo
Vice President of the Board1.1yrsno datano data
Daltro Leite
Member of Fiscal Council0yrsno datano data
Maria de Freitas Costa
Independent Director8.8yrsno datano data
Pedro de Godoy Bueno
Independent Director1.1yrsno datano data
Paulo Antunes Veras
Independent Director0yrsno datano data

1.8yrs

Average Tenure

68.5yo

Average Age

Experienced Board: RENT3's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 5.8%.


Top Shareholders

Company Information

Localiza Rent a Car S.A.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Localiza Rent a Car S.A.
  • Ticker: RENT3
  • Exchange: BOVESPA
  • Founded: 1973
  • Industry: Trucking
  • Sector: Transportation
  • Market Cap: R$41.556b
  • Shares outstanding: 755.57m
  • Website: https://www.localizahertz.com

Number of Employees


Location

  • Localiza Rent a Car S.A.
  • Avenida Bernardo Vasconcelos, 377
  • Cachoeirinha
  • Belo Horizonte
  • Minas Gerais
  • 31150-900
  • Brazil

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RENT3BOVESPA (Bolsa de Valores de Sao Paulo)YesCommon SharesBRBRLMay 2005
LZRF.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDJun 2012

Biography

Localiza Rent a Car S.A. engages in car rental and franchising activities. The company is also involved in selling decommissioned cars; providing car parking services; and managing car-related claims for insurance companies. As of March 31, 2018, it operated a fleet of 193,260 cars; and 591 car rental locations in Brazil and internationally. The company serves individuals, legal entities, and corporations. Localiza Rent a Car S.A. has a strategic partnership agreement with The Hertz Corporation. The company was founded in 1973 and is headquartered in Belo Horizonte, Brazil. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 18:05
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.