Shares of Avis Budget Group Inc. jumped after hours on Monday, after the car-rental chain reported fourth-quarter results that beat expectations, helped by a rebound in travel demand that it said has extended into the current quarter.
The company reported fourth-quarter net income of $424 million, or $10.10 a share, compared with $381 million, or $6.63 a share, in the same quarter in 2021. Revenue rose 8% to $2.77 billion, compared with $2.57 billion in the prior-year quarter.
Adjusted for acquisition-related costs and other expenses, Avis CAR,
Analysts polled by FactSet expected Avis to report adjusted earnings per share of $6.68, on revenue of $2.67 billion.
“Our fourth-quarter demand was strong, with our commercial business performing well above 2019 levels, and the leisure segment continuing its strong performance, especially over the holiday period,” Chief Executive Joe Ferraro said in a statement. “These trends have continued into the first quarter.”
Shares climbed 4% after hours, after initially jumping more than 7%.
Car rentals have increased over the past two years as more people return to vacations and business travel. That demand ran into an auto shortage, which was caused by a chip shortage, and a shortage of cars available for rent after rental chains sold them off in anticipation of a drop-off in demand when the pandemic first hit. Rental rates jumped as travel rebounded.
Avis’s management in October said it was confident that its “strong summer performance” would carry into the fall and holiday season despite concerns of a downturn. The company has said it offloaded older vehicles with more mileage and brought in new ones, and its rental fleet size increased in the third quarter.
But executives have said shortages of chips and other parts, as well as delayed auto shipments, were still potential issues, possibly making for tighter available supply this year. And flight cancellations have constrained rental times.
Shares of Avis are up 13.8% over the past 12 months. By comparison, the S&P 500 Index SPX,