Avis Budget Group (CAR): Valuation in Focus After Strong Q3 Results and International Expansion Progress

Avis Budget Group (CAR) posted stronger-than-expected results for the third quarter, as both earnings and revenues beat consensus forecasts. Investors are now watching closely, particularly with international adjusted EBITDA growth in focus and evolving transportation trends under consideration.

See our latest analysis for Avis Budget Group.

This positive earnings surprise arrives as Avis Budget Group’s share price continues to show robust momentum, with a year-to-date price return of nearly 69% and a 1-year total shareholder return of 24.6%. While the past three months saw some volatility, the overall longer-term trajectory remains impressive. This reflects renewed optimism around both its international expansion and the industry’s shift toward digital and eco-friendly solutions.

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But with the stock trading near its analyst price target after this year’s rapid gains, the key question remains: is Avis Budget Group truly undervalued, or is the market already factoring in all foreseeable growth?

Most Popular Narrative: Fairly Valued

With Avis Budget Group’s latest close at $135.88 just a touch above the most widely followed narrative fair value of $135.75, investors are weighing both ambitious growth drivers and execution risks.

Current enthusiasm for digital transformation and technology-enabled fleet management (including data-driven pricing and concierge experiences) may be leading the market to overestimate sustainable margin improvements, given execution risks, potential capital intensity, and the pace of competitive digital disruption. All of these factors could pressure net margins if cost or adoption targets are missed.

Read the complete narrative.

How can future margins climb so quickly despite industry headwinds? Uncover which forward-looking earnings assumptions and profit projections underpin this crowd-sourced benchmark and see what it suggests about where the stock could go next.

Result: Fair Value of $135.75 (ABOUT RIGHT)

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

However, shifts toward ride-hailing and increased competition from rival premium offerings could limit long-term revenue and margin expansion for Avis Budget Group.

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

Another View: Is the Market Overlooking the Value?

Looking at Avis Budget Group’s price-to-sales ratio of 0.4x, the stock appears attractively priced compared to both the US Transportation industry average of 1.1x and peer average of 2.3x. The fair ratio for this stock is estimated to be 0.9x. This suggests the market could eventually revalue the shares higher if fundamentals improve. Does this mean there is hidden upside, or are risks keeping the valuation low for a reason?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Avis Budget Group Narrative

If you have your own perspective or want to see where the data leads, you can shape your own narrative in just a few minutes with Do it your way.

A great starting point for your Avis Budget Group research is our analysis highlighting 2 key rewards and 1 important warning sign 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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