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Stock Market & Financial Investment News

News Breaks
June 6, 2014
15:09 EDTHTZ, CARHertz crashes after more accounting errors found, profit warning issued
Shares of rental company Hertz (HTZ) are crashing after the company warned its first quarter results are "likely to be below consensus" and revealed that mistakes were identified during its preparation of its financial statements and that certain ones must be restated. WHAT'S NEW: Hertz announced that it postponed the filing of its form 10-Q due to errors identified relating to the company's conclusions regarding the capitalization and timing of depreciation for certain non-fleet assets, allowances for doubtful accounts in Brazil, as well as other items. Hertz continued its review and identified additional errors related to allowances for uncollectible amounts with respect to renter obligations for damaged vehicles and restoration obligations at the end of facility leases. The company's audit committee concluded that the financial statements for 2011 should no longer be relied upon and Hertz must restate them. Hertz said in its filing that it also needs to correct the 2012 and 2013 financial statements to reflect these errors and that it may need to restate those as well. Hertz also noted in the filing that for Q1 the company’s results are "likely to be below consensus, reflecting costs associated with the accounting review, other unusual items, and certain anticipated operating results." Consensus for Hertz' Q1 EPS and revenue were 9c and $2.56B, respectively, prior to the filing. Hertz also noted in its filing that Q1 U.S. rental car revenue increased approximately 4.5% over the same period last year and that U.S. rental car total revenue per day was down 1.6% compared with last year. International rental car revenue increased approximately 1.7% over the same period last year and worldwide equipment rental segment revenue increased approximately 2.4% over the same period last year during Q1, Hertz added. WHAT'S NOTABLE: Hertz had previously filed to delay its 10-Q on May 13 and disclosed some of the errors it had found to that point. Hertz stated that its previously disclosed equipment rental business’ transition into a new, publicly traded company is advancing and remains "on track," but added that it is possible that the efforts to resolve the various accounting issues could impact the timing of the actual separation. ANALYST REACTION: Wells Fargo analyst Richard Kwas wrote that Hertz's disclosure will be a headwind for the stock, as he feels the ongoing accounting mistakes are likely to spark further concerns among investors. However, Kwas noted that the errors don't appear to be fleet-related and he feels the forward commentary the company gave as part of its filing to be "good." Wells Fargo has an Outperform rating on the stock. OTHERS TO WATCH: The primary publicly traded competitor to Hertz in the rental car industry is Avis Budget (CAR). PRICE ACTION: During afternoon trading, shares of Hertz fell 8.86% to $27.79, while Avis Budget was up 2.25% to $60.03.
News For HTZ;CAR From The Last 14 Days
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July 16, 2014
14:14 EDTCARAvis to use space in Tesco lots under new test, Guardian reports
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