CAR Q2 Earnings Miss Puts Fleet Discipline and 2026 Guidance in Focus

CAR’s Q2 Miss Exposes Demand Pressure

Quarterly earnings missed the Zacks Consensus Estimate by 54.6%. Revenues declined 1.3% year over year to approximately $3 billion as total rental days fell 2%.

The Americas segment recorded a 2% revenue decline, reflecting a 2% decrease in rental days. International rental days fell 3%, while revenues were roughly flat on a reported basis. Management cited weaker inbound demand, higher travel costs and geopolitical volatility as pressures on travel activity.

Hertz Global Holdings, Inc. HTZ offers a direct comparison within vehicle rentals, where fleet sizing and pricing remain central to profitability. Uber Technologies, Inc. UBER provides a broader mobility-demand reference as travelers continue to divide spending across rental, ride-hailing and other transportation options.

Fleet Discipline Supports CAR’s Margins

Avis Budget reduced its average rental fleet 5% year over year, including a 5% reduction in the Americas. The smaller fleet lifted total vehicle utilization 1.9 percentage points to a second-quarter record of 72.6%, while Americas utilization reached a record 73.2%.

The tighter fleet also lowered exposure to depreciation and operating costs. Vehicle depreciation and lease charges fell to $583 million from $636 million, while total per-unit fleet costs, excluding currency effects, declined 4% to $290 per month.

These savings helped adjusted EBITDA rise 3% to $286 million despite lower revenues. Americas adjusted EBITDA increased 8%, more than offsetting an 11% decline in International adjusted EBITDA.

Avis Budget Reaffirms Its 2026 EBITDA Outlook

Management reiterated its full-year adjusted EBITDA guidance of $850 million to $1 billion after exceeding its internal plan in the first half. The outlook does not assume a broad demand recovery.

For the third quarter, Avis Budget expects revenue per day to remain roughly flat year over year. The Americas fleet should stay down by a similar amount as in the second quarter, with stronger utilization partly offsetting the effect on rental days.

CAR’s Deleveraging Plan Is a Key Test

Avis Budget refinanced its $2 billion revolving credit facility, extending the maturity to June 2031, and added a temporary $200 million facility. It also issued $300 million of senior notes due 2031 and used the proceeds to reduce notes due 2027.

Net corporate leverage stood at 7.4X at June 30, down one turn from year-end 2025. Management aims to reduce leverage by at least another full turn by year-end, supported in part by expected proceeds from the Pentwater settlement, subject to court approval.

CAR’s Rank and Style Scores Favor Caution

The bottom line is that fleet discipline is supporting margins, but soft demand and leverage leave little room for execution errors. Meeting the EBITDA range and deleveraging target would strengthen financial flexibility; a shortfall would keep balance-sheet concerns in focus.

CAR currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

It has a Value Score of A, Growth Score of B, Momentum Score of D and VGM Score of B.

The favorable Value, Growth and VGM Scores recognize attractive valuation and operating characteristics. However, Style Scores complement rather than override the Zacks Rank. The bearish rank and weak momentum profile favor caution until earnings estimate revisions and execution trends improve.

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This article originally published on Zacks Investment Research (zacks.com).

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