Head-To-Head Analysis: Avis Budget Group (CAR) and Ryder (R)

Avis Budget Group (NASDAQ: CAR) and Ryder (NYSE:R) are both mid-cap business services companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, profitability, earnings, institutional ownership and risk.

Profitability

This table compares Avis Budget Group and Ryder’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avis Budget Group 4.08% 76.64% 1.25%
Ryder 10.78% 10.47% 2.15%

Risk and Volatility

Avis Budget Group has a beta of 2.2, meaning that its share price is 120% more volatile than the S&P 500. Comparatively, Ryder has a beta of 1.47, meaning that its share price is 47% more volatile than the S&P 500.

Valuation and Earnings

This table compares Avis Budget Group and Ryder’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Avis Budget Group $8.85 billion 0.43 $361.00 million $2.85 16.53
Ryder $7.33 billion 0.54 $790.55 million $4.53 16.35

Ryder has lower revenue, but higher earnings than Avis Budget Group. Ryder is trading at a lower price-to-earnings ratio than Avis Budget Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Avis Budget Group and Ryder, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avis Budget Group 2 4 5 0 2.27
Ryder 1 4 4 0 2.33

Avis Budget Group presently has a consensus price target of $37.90, indicating a potential downside of 19.57%. Ryder has a consensus price target of $84.63, indicating a potential upside of 14.28%. Given Ryder’s stronger consensus rating and higher probable upside, analysts clearly believe Ryder is more favorable than Avis Budget Group.

Insider & Institutional Ownership

93.4% of Ryder shares are owned by institutional investors. 2.8% of Avis Budget Group shares are owned by company insiders. Comparatively, 2.3% of Ryder shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Ryder pays an annual dividend of $2.08 per share and has a dividend yield of 2.8%. Avis Budget Group does not pay a dividend. Ryder pays out 45.9% of its earnings in the form of a dividend. Ryder has increased its dividend for 9 consecutive years.

Summary

Ryder beats Avis Budget Group on 10 of the 17 factors compared between the two stocks.

Avis Budget Group Company Profile

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. It operates the Avis brand, a vehicle rental system with approximately 5,450 locations that supply rental cars to the premium commercial and leisure segments of the travel industry; the Budget brand, a vehicle rental and other mobility solutions primarily focuses on the value-conscious segments of the industry; the Zipcar brand, a membership-based car sharing network; and the Budget Truck brand, a local and one-way truck rental businesses with a fleet of approximately 19,000 vehicles, which are rented through a network of approximately 925 dealer-operated and 450 company-operated locations that serve the consumer and light commercial sectors in the continental United States. The company also operates the Payless brand, which comprises approximately 280 vehicle rental locations; the Apex brand that primarily in the deep-value segment of the car rental industry with approximately 25 rental locations in New Zealand and Australia; and the Maggiore brand that provides vehicle rental services in approximately 140 locations, as well as the France Cars brand, which offers light commercial vehicle fleets with approximately 70 rental locations in France. In addition, it offers optional insurance products and coverages, such as supplemental liability, personal accident, personal effects protection, emergency sickness protection, automobile towing protection, and cargo insurance products. The company was formerly known as Cendant Corporation and changed its name to Avis Budget Group, Inc. in September 2006. Avis Budget Group, Inc. was founded in 1946 and is headquartered in Parsippany, New Jersey.

Ryder Company Profile

Ryder System, Inc. provides transportation and supply chain management solutions worldwide. The company operates through three segments: Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS), and Supply Chain Solutions (SCS). The FMS segment offers full service leasing and leasing with flexible maintenance options, as well as maintenance services, supplies, and related equipment for operation of the vehicles; commercial vehicle rental services; and contract or transactional maintenance services of trucks, tractors, and trailers, as well as ancillary maintenance and fleet support services. This segment also provides access to diesel fuel; offers fuel services, such as fuel planning and tax reporting, centralized billing, fuel cards, and fuel monitoring services; and sells used vehicles through its 53 retail sales centers and Usedtrucks.Ryder.com Website. The DTS segment offers equipment, maintenance, drivers, administrative, and additional services, as well as routing and scheduling, fleet sizing, safety, regulatory compliance, risk management, technology and communication systems support, and other technical support services. The SCS segment comprises distribution management services, such as managing the flow of goods from the receiving to the shipping function; coordinating warehousing and transportation for inbound and outbound material flows; handling import and export for international shipments; coordinating just-in-time replenishment of component parts to manufacturing and final assembly; and providing shipments to customer distribution centers or end customer delivery points, as well as other value added services. This segment also offers transportation management services, such as shipment optimization, load scheduling, and delivery confirmation services through technological and Web-based solutions; and knowledge-based professional services. Ryder System, Inc. was founded in 1933 and is headquartered in Miami, Florida.

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