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Avis Budget Group (CAR) just released its third quarter results, highlighting a clear jump in both net income and earnings per share compared to last year. Sales edged up; however, profitability was the real standout this quarter.

See our latest analysis for Avis Budget Group.

Following that strong earnings report, Avis Budget Group’s share price momentum has been notable, with a 78% jump year-to-date and a 1-year total shareholder return of 54%. While there have been some pullbacks over the past quarter, performance over both the short and long term remains robust. This signals that investors are recognizing the company’s improved profitability and growth potential.

If Avis’s latest rally has you looking for fresh opportunities, now is a great time to broaden your search and discover fast growing stocks with high insider ownership

But with shares already up sharply this year, investors face a crucial question: Is Avis Budget Group still trading at an attractive valuation, or is the market now fully pricing in its recent surge and future prospects?

With a most popular narrative fair value of $139.50, Avis Budget Group’s last close of $143.31 stands slightly above what analysts believe is justified at this stage. There is a subtle tension in analyst expectations, which are less bullish than recent share price trends suggest.

The launch and rapid scaling of Avis First, a premium rental offering, could be fueling expectations of significant revenue and margin expansion, as investors anticipate a sustained uplift in average revenue per day (RPD) and market share capture from price-insensitive travelers. This optimism may not fully account for competitive responses or changing customer preferences, increasing the risk that future revenue and net margin improvements fall short of current valuations.

Read the complete narrative.

Want to know the secret formula behind this tight valuation call? The narrative leans on big promises about future revenue momentum and profit margin breakthroughs. Curious which dramatic financial shifts would need to happen for today’s price to be warranted? Find out what drives the numbers in this forecast and see why the narrative walks such a fine line.

Result: Fair Value of $139.50 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, rapid adoption of alternative mobility options or aggressive new competitors in the premium segment could challenge Avis’s growth expectations and threaten future margins.

Find out about the key risks to this Avis Budget Group narrative.

Looking at how Avis Budget Group trades versus its revenue, the price-to-sales ratio of 0.4x seems attractively low. This is far below the US Transportation industry average of 1.2x, the peer average of 2.4x, and even the fair ratio of 0.9x that the market could pivot toward. Does this gap point to a hidden opportunity, or is the market rightly cautious based on recent results?

See what the numbers say about this price — find out in our valuation breakdown.

If this perspective does not resonate with you or you prefer to draw your own conclusions, consider diving into the data and crafting a personalized story in just a few minutes. Do it your way

A great starting point for your Avis Budget Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CAR.

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