Will U.S. Rental Car Segment Aid Hertz's (HTZ) Q2 Earnings?

Hertz Global Holdings, Inc (NYSE:HTZ) is scheduled to report second-quarter 2019 earnings numbers on Aug 6, after the market closes.

Last reported quarter, the company delivered a positive surprise of 25%. The adjusted loss of 99 cents per share was narrower than the Zacks Consensus Estimate of a loss of $1.32. Moreover, the amount of loss decreased on a year-over-year basis. Solid pricing, volume growth and efficient fleet management benefited results. Quarterly revenues came in at $2.11 billion, missing the Zacks Consensus Estimate of $2.17 billion. However, the top line improved 2.1% on the back of an impressive performance of the U.S. Rental Car segment.

With the Zacks Consensus Estimate for second-quarter earnings being revised upward by 19 cents, the company seems to be well-placed to deliver an earnings beat this soon-to-be-reported quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Hertz is likely to beat on earnings in the upcoming quarterly results because it has the perfect combination of the following two key ingredients:

Earnings ESP: Hertz has an Earnings ESP of +120.23% as the Most Accurate Estimate is pegged at 49 cents, much higher than the Zacks Consensus Estimate of 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hertz carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 alongside a positive Earnings ESP have significantly higher chances of beating estimates.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Likely at Play

As has been the case over the last few quarters, the U.S. Rental Car segment is anticipated to put up a good show in the second quarter too. With this segment generating maximum revenues, the company’s top line should benefit and thus lift overall results.

The company’s turnaround plan should further drive results in the quarter through volume expansion and a strong pricing.

On the flip side, significant investments in the turnaround plan have been partly affecting the company’s bottom-line growth and the second quarter is not likely to be any different. Additionally, declining revenues at the company’s International Rental Car segment might hurt the top line.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider stocks like Frontline Ltd. (NYSE:FRO) , Saia, Inc. (NASDAQ:SAIA) and SkyWest, Inc. (NASDAQ:SKYW) as these too possess the right combination of elements to come up with an earnings beat in their next releases.

Frontline has an Earnings ESP of +400.03% and a Zacks Rank of 3. The company is scheduled to report second-quarter earnings on Aug 30.

Saia has an Earnings ESP of +1.22% and is a Zacks #3 Ranked player. The company will announce second-quarter results on Jul 31.

SkyWest has an Earnings ESP of +3.25% and a Zacks Rank #2. The company is slated to release second-quarter earnings numbers on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

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