Can Hertz Stock Sustain Its Recent 15% Rally After Strong Travel Season in 2025?

If you have ever wondered whether Hertz Global Holdings is poised for a comeback or remains a risky bet, you are not alone. Investors have watched the stock whip back and forth lately, trying to read the signals: was that 7.7% dip over the past week a warning, or just another pit stop? And what about that striking 15.5% jump across the last month, not to mention an 88.3% gain over the past year? The recent run-up clearly suggests the market is warming up to Hertz again, as broader enthusiasm for travel and auto rentals helps solidify the company’s position after tougher years.

Despite some long-term declines, with the stock still down more than 60% over three years, the momentum in 2024 cannot be ignored. While there have been no massive headlines sending shockwaves through the sector, improved industry conditions and investor optimism are shifting perceptions of risk for Hertz. As always, the big question is: is the current price a bargain or already reflecting everything good that can happen?

That is where valuation analysis comes in. For Hertz Global Holdings, our scorecard shows the company is undervalued in 5 out of 6 key metrics. A value score of 5 is hard to overlook. But as useful as checklists and numbers are, they only tell part of the story. Let us dig into each valuation method, and then consider if there is a better way to judge what the stock is truly worth.

Hertz Global Holdings delivered 88.3% returns over the last year. See how this stacks up to the rest of the Transportation industry.

Approach 1: Hertz Global Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and discounting them back to today’s value. For Hertz Global Holdings, this approach starts with the company’s latest reported Free Cash Flow, which stands at -$1.24 Billion. Analysts project that by 2026, annual Free Cash Flow will swing positive, reaching $595 Million. After that, DCF analysis draws on further extrapolations and estimates Hertz’s Free Cash Flow will grow to approximately $4.54 Billion by 2035. All these projections are summed up and discounted to reflect the value in today’s dollars.

Based on this model, the intrinsic fair value per share comes out to $91.79. Compared to the current market price, this suggests the stock is 93.2% undervalued. The numbers imply that investors may be significantly undervaluing Hertz's rebound potential and future cash generation.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hertz Global Holdings.

Our Discounted Cash Flow (DCF) analysis suggests Hertz Global Holdings is undervalued by 93.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Hertz Global Holdings Price vs Sales

For companies in industries where profitability can swing due to economic cycles or reinvestment, the Price-to-Sales (P/S) ratio is often the best valuation tool. While earnings can fluctuate or go negative, sales tend to be steadier and provide a useful baseline for assessing value, especially for turnaround stories like Hertz Global Holdings.

Growth prospects and risk are crucial in interpreting what makes for a “normal” P/S ratio. High-growth companies with stable outlooks might warrant a higher P/S, while riskier or slower-growing peers typically trade at lower multiples. Currently, Hertz’s P/S ratio is 0.23x, well below the Transportation industry average of 1.35x and its peer group’s average of 2.64x. On the surface, Hertz appears discounted compared to these benchmarks.

However, instead of relying solely on industry comparisons, Simply Wall St’s proprietary Fair Ratio model incorporates company-specific factors such as growth outlook, risk profile, margins, and relative market cap. This approach aims for a more personalized valuation estimate. For Hertz, the calculated Fair Ratio is 0.41x. This adjustment is more tailored than simply looking at what “similar” companies are trading for, as it accounts for Hertz’s unique blend of attributes and prospects.

Comparing Hertz’s actual P/S of 0.23x to its Fair Ratio of 0.41x, the stock stands as undervalued by this measure.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Hertz Global Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is a simple yet powerful tool that lets you create, share, and compare a story behind your view of Hertz Global Holdings, connecting your personal assumptions about the company’s future revenue, profit margins, and fair value to a clearly defined forecast.

Instead of relying only on ratios or models, Narratives help you map out and justify your perspective. They link Hertz’s journey, expected milestones, and industry shifts directly to numbers, making investment decisions feel more logical and grounded. Available in the Simply Wall St Community (where millions of investors exchange ideas), Narratives make it easy for you to check if your fair value estimate is above or below the current market price and help you decide when to buy, sell, or hold.

Importantly, Narratives are dynamically updated as news, earnings, and company announcements come in, so your view evolves with the facts. For example, some investors believe disruptive mobility trends could push Hertz’s fair value as low as $3.00 per share, while others see digital modernization driving a much higher value, up to $6.00. With Narratives, you can compare these viewpoints instantly, test your own assumptions, and make smarter, more confident investment decisions.

Do you think there's more to the story for Hertz Global Holdings? Create your own Narrative to let the Community know!

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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