Should I Buy Avis Budget (CAR)? Finance YouTuber Analysis

The analyst recommends Avis Budget, noting its strong operating cash flow and significant share buybacks, with shares outstanding down 20% since 2021. Despite past negative free cash flow due to capital expenditures, management believes the debt-backed fleet expansion is appropriate. The stock trades at a low P/E of 3.2 (trailing) and 6.3 (forward), and the analyst expects the rental car business to normalize, benefiting Avis due to its scale and better capital expenditure management compared to competitors.

“The current price for the stock is relatively attractive as I'm recording price stting is multiple on a trailing basis anyways just 3.2 on a forward basis is 6.3.”

The YouTuber highlights Avis Budget Group's substantial share buybacks, with shares outstanding down almost 70%. Despite increased debt, net income is strong, and the company trades at a low forward P/E of 8.6 and trailing P/E of 3.3, making it an attractive investment due to its capital allocation strategy.

“Avis Budget Group may not be the kind of company that seems attractive from an investment perspective because rental cars just aren't that sexy of a business but when you consider that they're generating pretty good yields from the business and they're using most of that money to buy back stock looks pretty attractive from an investment perspective today”

The analyst recommends Avis Budget, citing strong supply-demand dynamics in the rental car market leading to high prices and margins. The company has significantly reduced its shares outstanding by nearly 70% over the last decade through buybacks. Despite volatile free cash flow, the analyst believes current market conditions, including limited vehicle production and high new/used car prices, will continue to drive strong performance for the next 5-10 years.

“The current market cap is seven billion dollars but you can see here that over the last 10 years the shares outstanding have dropped by nearly 70 percent as the company has bought back a ton of its own shares.”