A Fresh Look at Avis Budget Group (CAR) Valuation After SRS Deal and Waymo Autonomous Partnership

For those tracking Avis Budget Group (CAR), this week brought two major announcements that could reshape both investor sentiment and the company’s long-term trajectory. First, Avis Budget Group amended its cooperation agreement with SRS Investment Management, giving SRS the ability to hold up to 45% of the company’s voting stock, up from 35%, while also updating the board’s composition and governance terms. At the same time, Avis revealed it will team up with Waymo to launch a fully autonomous ride-hailing service in Dallas next year, signaling a bold step into the future of transportation. Both moves send clear signals about evolving priorities, control, and innovation at the company.

All this comes as Avis Budget Group’s share price has made significant gains, rising 28% over the past three months and more than doubling since the start of the year. The stock has outperformed its five-year average by a wide margin, reflecting renewed investor enthusiasm. Momentum has clearly shifted upward, even as questions linger about short-term volatility and whether these developments are already reflected in the current valuation.

The question now is whether the market’s optimism has gotten ahead of itself or if there is genuine value still to be unlocked. Is this the start of another upward phase, or are we entering a period where growth is already reflected in the price?

Most Popular Narrative: 5% Overvalued

The leading narrative sees Avis Budget Group trading above its fair value, with future growth assumptions already reflected in the current price even as some improvements are anticipated over time.

The partnership with Waymo and stated ambitions to become a core fleet and asset manager for autonomous vehicles is fueling future growth narratives. Investors project Avis will capture a sizable share of vehicle miles traveled (VMT) in the autonomous mobility ecosystem, which could lead to long-term revenue and free cash flow expansion that may not be realized if AV adoption or partnership economics disappoint.

Curious what propels such an ambitious valuation? The narrative centers on transformation bets, future earnings leaps, and daring margin targets. Wondering which precise financial projections are behind the aggressive fair value? This storyline has some eyebrow-raising growth forecasts at its core; details reveal the full bullish case.

Result: Fair Value of $148 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifts in mobility habits and increased competition in premium segments could challenge ambitions for sustained growth and put pressure on profit margins.

Find out about the key risks to this Avis Budget Group narrative.

Another View: SWS DCF Model Offers a Different Perspective

While market optimism is high based on earnings projections and valuation multiples, our SWS DCF model offers a different perspective on Avis Budget Group’s true worth. Could the discounted cash flow approach be highlighting risks or growth assumptions that the market has not fully considered?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Avis Budget Group to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Avis Budget Group Narrative

If the story above doesn't align with your perspective, or you'd rather dive into the numbers firsthand, you can shape your own take on Avis Budget Group in just a few minutes. Do it your way.

A great starting point for your Avis Budget Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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