Momentum Stock: Dollar Thrifty Automotive Group, Inc.
Dollar Thrifty Automotive Group, Inc. (DTG)
It was less than two months ago when DTG hit the Momentum list as Rank Buy.? At the time, the stock was trading at $71 a share.? Shares have since rallied 13% to a new 52 week high of over $80 and continue to build on the tremendous momentum we have seen since October 2011.
Prior to its most recent report, DTG showed strong Q3 results and beat estimates across the board.? They replaced their CEO and saw improving rent rates and increasing demand.? The company was looking strong going into their Q4 report on February 21st and they delivered.
Q4 Developments
For Q42011, DTG crushed estimates yet again, beating the Zacks Consensus Estimate of $0.75 by over 45%.? They saw earnings of $1.09 in the quarter, which was 252% more than the same quarter in 2010.? Gross margin for the quarter was 33.7%, 800 basis points better than the prior-year quarter. Operating margin was 20.8%, 780 basis points better than the prior-year quarter. Net margin was 9.6%, 600 basis points better than the prior-year quarter.
The company noted that:
- They expect the U.S. travel market to improve this year
- Project rental revenue will rise 3% to 5% this year and sees a favorable used-vehicle market
- 2012 fleet costs are expected to be greater than what the company reported in the second half of 2011
Looking to Q1 of 2012, the rental company expects earnings per share to be within a range of $1.15 to $1.40 per diluted share, and Corporate Adjusted EBITDA to be within a range of $70 million to $80 million
The board also decided to extend a plan meant to deter hostile takeover attempts for another year. The plan was adopted last year amidst a flurry of interest from companies like Hertz Global Holdings Inc. (HTZ) looking to acquire the company at a cheap price; so much for an easy acquisition here.
Company Description
Dollar Thrifty Automotive Group, headquartered in Oklahoma offers global automotive rental solutions in both the traditional corporate structure as well as franchises of their Thrifty brand.? Their brands have been around since the mid 20th century (1965 for Dollar & 1950 for Thifty)
Between the Dollar and Thrifty brands, they cover approximately 1,575 corporate and franchised worldwide locations including approximately 600 in the United States and Canada. They operate in virtually all of the top U.S. and Canadian airport markets and are expanding globally.
They operate their business without any corporate debt and a ton of liquidity. Though their partners such as American Airlines, United, Southwest, Orbitz, Hotwire, Travelocity and more, they are able to weave and combine their low cost rentals into natural travel searches and online bookings.
Financial Profile & Earnings Estimates
Dollar Thrifty Automotive Group is a mid cap company that is trading at about 15 times forward earnings (P/E). ?Dollar Thrifty Automotive Group jumped back to a Zacks Rank 1 Strong Buy on February 22nd.
We noticed several upward revisions from analysts following their strong earnings report.? ?Bullish revisions were made in the past 30 days to the current and following quarters, as well as 2012 and 2013 earnings projections.
Expectations are for Dollar Thrifty Automotive Group to make $1.29 this quarter when they report on May 10th. ?Of the five analysts that cover Dollar Thrifty, the consensus is for the company to grow earnings by 1% in FY2012 and 4.5% in FY2013.
Dollar Thrifty Automotive Group surprised analysts to the upside for the past four quarters in a row with an average surprise of 25.17%.
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Jared A Levy is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
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DOLLAR THRIFTY (DTG): Free Stock Analysis Report
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Source: http://www.dailymarkets.com/stock/2012/03/13/momentum-stock-dollar-thrifty-automotive-group-inc-4/
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