Intrinsic value of Avis Budget Group - CAR

Previous Close

$32.36

  Intrinsic Value

$9.17

stock screener

  Rating & Target

str. sell

-72%

  Value-price divergence*

-72%

Previous close

$32.36

 
Intrinsic value

$9.17

 
Up/down potential

-72%

 
Rating

str. sell

 
Value-price divergence*

-72%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CAR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  1.85
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  8,659
  8,832
  9,035
  9,268
  9,528
  9,817
  10,134
  10,479
  10,853
  11,255
  11,687
  12,149
  12,642
  13,167
  13,725
  14,317
  14,945
  15,609
  16,311
  17,054
  17,837
  18,664
  19,536
  20,455
  21,423
  22,443
  23,517
  24,647
  25,837
  27,088
  28,404
Variable operating expenses, $m
 
  8,009
  8,191
  8,399
  8,632
  8,891
  9,174
  9,483
  9,818
  10,178
  10,565
  10,878
  11,320
  11,790
  12,289
  12,819
  13,381
  13,976
  14,605
  15,269
  15,971
  16,711
  17,492
  18,315
  19,182
  20,095
  21,056
  22,068
  23,133
  24,254
  25,432
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,929
  8,009
  8,191
  8,399
  8,632
  8,891
  9,174
  9,483
  9,818
  10,178
  10,565
  10,878
  11,320
  11,790
  12,289
  12,819
  13,381
  13,976
  14,605
  15,269
  15,971
  16,711
  17,492
  18,315
  19,182
  20,095
  21,056
  22,068
  23,133
  24,254
  25,432
Operating income, $m
  730
  823
  845
  869
  896
  926
  960
  996
  1,035
  1,077
  1,122
  1,271
  1,323
  1,378
  1,436
  1,498
  1,564
  1,633
  1,707
  1,784
  1,866
  1,953
  2,044
  2,140
  2,242
  2,348
  2,461
  2,579
  2,703
  2,834
  2,972
EBITDA, $m
  2,860
  2,162
  2,212
  2,269
  2,333
  2,404
  2,481
  2,566
  2,657
  2,756
  2,861
  2,975
  3,095
  3,224
  3,360
  3,505
  3,659
  3,822
  3,994
  4,175
  4,367
  4,569
  4,783
  5,008
  5,245
  5,495
  5,758
  6,034
  6,326
  6,632
  6,954
Interest expense (income), $m
  461
  459
  413
  427
  443
  460
  480
  502
  525
  550
  578
  607
  638
  672
  707
  745
  785
  828
  873
  920
  971
  1,024
  1,080
  1,139
  1,201
  1,267
  1,336
  1,409
  1,486
  1,566
  1,651
Earnings before tax, $m
  279
  365
  431
  442
  453
  466
  480
  494
  510
  527
  545
  664
  685
  706
  729
  753
  778
  805
  834
  864
  895
  929
  964
  1,001
  1,040
  1,081
  1,124
  1,170
  1,217
  1,268
  1,321
Tax expense, $m
  116
  98
  116
  119
  122
  126
  129
  133
  138
  142
  147
  179
  185
  191
  197
  203
  210
  217
  225
  233
  242
  251
  260
  270
  281
  292
  304
  316
  329
  342
  357
Net income, $m
  163
  266
  315
  323
  331
  340
  350
  361
  372
  384
  398
  485
  500
  515
  532
  550
  568
  588
  609
  631
  654
  678
  704
  731
  759
  789
  821
  854
  889
  925
  964

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  490
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  17,643
  17,988
  18,402
  18,875
  19,406
  19,994
  20,640
  21,343
  22,103
  22,923
  23,803
  24,744
  25,748
  26,818
  27,954
  29,160
  30,438
  31,790
  33,221
  34,732
  36,328
  38,012
  39,788
  41,660
  43,632
  45,709
  47,896
  50,198
  52,620
  55,169
  57,849
Adjusted assets (=assets-cash), $m
  17,153
  17,988
  18,402
  18,875
  19,406
  19,994
  20,640
  21,343
  22,103
  22,923
  23,803
  24,744
  25,748
  26,818
  27,954
  29,160
  30,438
  31,790
  33,221
  34,732
  36,328
  38,012
  39,788
  41,660
  43,632
  45,709
  47,896
  50,198
  52,620
  55,169
  57,849
Revenue / Adjusted assets
  0.505
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
  0.491
Average production assets, $m
  12,138
  12,383
  12,668
  12,993
  13,359
  13,764
  14,208
  14,692
  15,216
  15,780
  16,385
  17,033
  17,725
  18,461
  19,243
  20,073
  20,953
  21,884
  22,869
  23,909
  25,008
  26,167
  27,389
  28,678
  30,035
  31,465
  32,971
  34,555
  36,223
  37,977
  39,822
Working capital, $m
  50
  -168
  -172
  -176
  -181
  -187
  -193
  -199
  -206
  -214
  -222
  -231
  -240
  -250
  -261
  -272
  -284
  -297
  -310
  -324
  -339
  -355
  -371
  -389
  -407
  -426
  -447
  -468
  -491
  -515
  -540
Total debt, $m
  12,401
  11,168
  11,541
  11,966
  12,444
  12,974
  13,555
  14,187
  14,872
  15,610
  16,402
  17,249
  18,152
  19,115
  20,137
  21,223
  22,373
  23,590
  24,878
  26,238
  27,674
  29,190
  30,788
  32,473
  34,248
  36,117
  38,085
  40,157
  42,337
  44,631
  47,043
Total liabilities, $m
  17,422
  16,189
  16,562
  16,987
  17,465
  17,995
  18,576
  19,208
  19,893
  20,631
  21,423
  22,270
  23,173
  24,136
  25,158
  26,244
  27,394
  28,611
  29,899
  31,259
  32,695
  34,211
  35,809
  37,494
  39,269
  41,138
  43,106
  45,178
  47,358
  49,652
  52,064
Total equity, $m
  221
  1,799
  1,840
  1,887
  1,941
  1,999
  2,064
  2,134
  2,210
  2,292
  2,380
  2,474
  2,575
  2,682
  2,795
  2,916
  3,044
  3,179
  3,322
  3,473
  3,633
  3,801
  3,979
  4,166
  4,363
  4,571
  4,790
  5,020
  5,262
  5,517
  5,785
Total liabilities and equity, $m
  17,643
  17,988
  18,402
  18,874
  19,406
  19,994
  20,640
  21,342
  22,103
  22,923
  23,803
  24,744
  25,748
  26,818
  27,953
  29,160
  30,438
  31,790
  33,221
  34,732
  36,328
  38,012
  39,788
  41,660
  43,632
  45,709
  47,896
  50,198
  52,620
  55,169
  57,849
Debt-to-equity ratio
  56.113
  6.210
  6.270
  6.340
  6.410
  6.490
  6.570
  6.650
  6.730
  6.810
  6.890
  6.970
  7.050
  7.130
  7.200
  7.280
  7.350
  7.420
  7.490
  7.550
  7.620
  7.680
  7.740
  7.790
  7.850
  7.900
  7.950
  8.000
  8.050
  8.090
  8.130
Adjusted equity ratio
  -0.016
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  163
  266
  315
  323
  331
  340
  350
  361
  372
  384
  398
  485
  500
  515
  532
  550
  568
  588
  609
  631
  654
  678
  704
  731
  759
  789
  821
  854
  889
  925
  964
Depreciation, amort., depletion, $m
  2,130
  1,339
  1,367
  1,400
  1,437
  1,477
  1,521
  1,570
  1,622
  1,679
  1,739
  1,703
  1,772
  1,846
  1,924
  2,007
  2,095
  2,188
  2,287
  2,391
  2,501
  2,617
  2,739
  2,868
  3,004
  3,147
  3,297
  3,456
  3,622
  3,798
  3,982
Funds from operations, $m
  2,833
  1,605
  1,682
  1,723
  1,768
  1,817
  1,872
  1,931
  1,994
  2,063
  2,137
  2,188
  2,272
  2,361
  2,456
  2,557
  2,664
  2,776
  2,896
  3,021
  3,154
  3,295
  3,443
  3,599
  3,763
  3,936
  4,118
  4,309
  4,511
  4,723
  4,946
Change in working capital, $m
  204
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
Cash from operations, $m
  2,629
  1,608
  1,686
  1,727
  1,773
  1,823
  1,878
  1,937
  2,002
  2,071
  2,145
  2,197
  2,282
  2,371
  2,467
  2,568
  2,675
  2,789
  2,909
  3,036
  3,169
  3,310
  3,459
  3,616
  3,781
  3,955
  4,138
  4,331
  4,534
  4,747
  4,971
Maintenance CAPEX, $m
  0
  -1,214
  -1,238
  -1,267
  -1,299
  -1,336
  -1,376
  -1,421
  -1,469
  -1,522
  -1,578
  -1,639
  -1,703
  -1,772
  -1,846
  -1,924
  -2,007
  -2,095
  -2,188
  -2,287
  -2,391
  -2,501
  -2,617
  -2,739
  -2,868
  -3,004
  -3,147
  -3,297
  -3,456
  -3,622
  -3,798
New CAPEX, $m
  -12,706
  -245
  -285
  -326
  -365
  -405
  -444
  -484
  -524
  -564
  -606
  -648
  -691
  -736
  -782
  -830
  -880
  -931
  -985
  -1,040
  -1,099
  -1,159
  -1,222
  -1,289
  -1,358
  -1,430
  -1,505
  -1,585
  -1,667
  -1,754
  -1,845
Cash from investing activities, $m
  -2,149
  -1,459
  -1,523
  -1,593
  -1,664
  -1,741
  -1,820
  -1,905
  -1,993
  -2,086
  -2,184
  -2,287
  -2,394
  -2,508
  -2,628
  -2,754
  -2,887
  -3,026
  -3,173
  -3,327
  -3,490
  -3,660
  -3,839
  -4,028
  -4,226
  -4,434
  -4,652
  -4,882
  -5,123
  -5,376
  -5,643
Free cash flow, $m
  480
  149
  163
  135
  108
  82
  57
  33
  9
  -15
  -39
  -89
  -113
  -137
  -161
  -186
  -212
  -238
  -264
  -292
  -320
  -349
  -380
  -411
  -444
  -478
  -514
  -551
  -589
  -630
  -672
Issuance/(repayment) of debt, $m
  -6
  -1,233
  372
  426
  478
  529
  581
  633
  685
  738
  792
  847
  904
  962
  1,023
  1,085
  1,150
  1,217
  1,287
  1,360
  1,436
  1,516
  1,598
  1,685
  1,775
  1,869
  1,968
  2,072
  2,180
  2,294
  2,412
Issuance/(repurchase) of shares, $m
  -387
  1,312
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -438
  79
  372
  426
  478
  529
  581
  633
  685
  738
  792
  847
  904
  962
  1,023
  1,085
  1,150
  1,217
  1,287
  1,360
  1,436
  1,516
  1,598
  1,685
  1,775
  1,869
  1,968
  2,072
  2,180
  2,294
  2,412
Total cash flow (excl. dividends), $m
  38
  228
  536
  560
  586
  611
  638
  665
  693
  723
  753
  758
  791
  825
  861
  899
  939
  980
  1,023
  1,069
  1,116
  1,166
  1,218
  1,273
  1,331
  1,391
  1,454
  1,521
  1,591
  1,664
  1,741
Retained Cash Flow (-), $m
  218
  -1,578
  -41
  -47
  -53
  -59
  -65
  -70
  -76
  -82
  -88
  -94
  -100
  -107
  -114
  -121
  -128
  -135
  -143
  -151
  -160
  -168
  -178
  -187
  -197
  -208
  -219
  -230
  -242
  -255
  -268
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -1,349
  494
  513
  533
  553
  573
  595
  617
  641
  665
  664
  690
  718
  748
  778
  811
  845
  880
  917
  957
  998
  1,041
  1,086
  1,134
  1,183
  1,236
  1,291
  1,348
  1,409
  1,473
Discount rate, %
 
  12.50
  13.13
  13.78
  14.47
  15.19
  15.95
  16.75
  17.59
  18.47
  19.39
  20.36
  21.38
  22.45
  23.57
  24.75
  25.99
  27.29
  28.65
  30.08
  31.59
  33.17
  34.82
  36.57
  38.39
  40.31
  42.33
  44.45
  46.67
  49.00
  51.45
PV of cash for distribution, $m
 
  -1,199
  386
  348
  310
  272
  236
  201
  169
  139
  113
  86
  68
  52
  39
  28
  20
  14
  9
  6
  4
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8
  62.8

Avis Budget Group, Inc., together with its subsidiaries, provides car and truck rentals, car sharing, and ancillary services to businesses and consumers worldwide. The company operates through two segments: Americas and International. It operates the Avis brand car rental system with approximately 5,550 locations that supply rental cars to the premium commercial and leisure segments of the travel industry; the Budget brand vehicle rental system with approximately 4,050 car rental locations, which serve the value-conscious segments of the industry; and the Zipcar brand, a membership-based car sharing network that provides vehicles to approximately 1 million members. The company also operates the Payless brand, which comprises approximately 240 vehicle rental locations; the Apex brand primarily in the deep-value segment of the car rental industry with approximately 25 rental locations in New Zealand and Australia; and the Maggiore brand that provides vehicle rental services in the commercial, leisure, and insurance replacement/leasing segments with approximately 130 rental locations in Italy, as well as the France Cars brand, which offers light commercial vehicle fleets with approximately 60 rental locations in France. In addition, it is involved in the local and one-way truck rental businesses with a fleet of approximately 22,000 vehicles, which are rented through a network of approximately 1,000 dealers and 480 company-operated locations that serve the consumer and light commercial sectors in the continental United States. Further, the company provides a range of optional insurance products and coverages, such as supplemental liability, personal accident, personal effects protection, emergency sickness protection, automobile towing protection, and cargo insurance products. Avis Budget Group, Inc. was founded in 1946 and is headquartered in Parsippany, New Jersey.

FINANCIAL RATIOS  of  Avis Budget Group (CAR)

Valuation Ratios
P/E Ratio 17.1
Price to Sales 0.3
Price to Book 12.6
Price to Tangible Book
Price to Cash Flow 1.1
Price to Free Cash Flow -0.3
Growth Rates
Sales Growth Rate 1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.6%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 5485.1%
Total Debt to Equity 5611.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 49.4%
Return On Equity - 3 Yr. Avg. 46.7%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 49.1%
Gross Margin - 3 Yr. Avg. 49.5%
EBITDA Margin 33.1%
EBITDA Margin - 3 Yr. Avg. 33.7%
Operating Margin 8.4%
Oper. Margin - 3 Yr. Avg. 9.3%
Pre-Tax Margin 3.2%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin 1.9%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 41.6%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 0%

CAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CAR stock intrinsic value calculation we used $8659 million for the last fiscal year's total revenue generated by Avis Budget Group. The default revenue input number comes from 2016 income statement of Avis Budget Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CAR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.5%, whose default value for CAR is calculated based on our internal credit rating of Avis Budget Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Avis Budget Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CAR stock the variable cost ratio is equal to 90.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CAR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.7% for Avis Budget Group.

Corporate tax rate of 27% is the nominal tax rate for Avis Budget Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CAR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CAR are equal to 140.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Avis Budget Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CAR is equal to -1.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $221 million for Avis Budget Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 89.509 million for Avis Budget Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Avis Budget Group at the current share price and the inputted number of shares is $2.9 billion.

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COMPANY NEWS

▶ Will Thailand Continue Its Economic Expansion in 2Q17?   [Jul-14-17 05:22PM  Market Realist]
▶ Avis Car Rentals Loyalty Program Is Now More Rewarding   [Jul-13-17 11:00AM  GlobeNewswire]
▶ Apple and Google: We'll Pick You Up   [Jul-08-17 05:41PM  Motley Fool]
▶ "Fast Money" final trades: GOOG, CAR and more   [Jul-06-17 05:59PM  CNBC Videos]
▶ What Investors Missed in the Market Last Week   [Jul-01-17 06:06PM  Motley Fool]
▶ Waymo Chose Avis to Service Its Driverless Cars   [Jun-29-17 07:48AM  Market Realist]
▶ L'Oreal, Natura Sign Deal for The Body Shop   [03:30PM  TheStreet.com]
▶ Buy Tiffany & Co., Now   [02:51PM  TheStreet.com]
▶ Yahoo Mail Gets a Makeover   [12:39PM  TheStreet.com]
▶ Siri Needs Her Own Personal Assistant   [12:22PM  TheStreet.com]
▶ Nestle Rolls Out Share Buyback Program   [12:18PM  TheStreet.com]
▶ Merck Says It's a Victim of Global Hack   [11:45AM  TheStreet.com]
▶ Company News for June 27, 2017   [10:52AM  Zacks]
▶ Avis & Hertz: Live to Fight Another Day?   [10:45AM  Barrons.com]
▶ Pandora CEO Tim Westergren Resigns   [09:36AM  TheStreet.com]
▶ Treasury Bonds Continue Their Worrying Rally   [07:45AM  InvestorPlace]
▶ What Happened in the Stock Market Today   [05:08PM  Motley Fool]
▶ Avis shares soar on Waymo car deal   [04:44PM  CNBC Videos]
▶ Apple, Google Self-Driving Car Deals Boost Rental Car Leaders   [04:24PM  Investor's Business Daily]
▶ Hertz Stock Soars on Apple Partnership   [02:57PM  TheStreet.com]
▶ Chips, cars & retail in the blitz   [02:01PM  CNBC Videos]
▶ Avis: If You Can't Beat 'Em   [12:58PM  Barrons.com]
▶ Tesla Gets Savaged By Avis and Alphabet   [11:26AM  TheStreet.com]
Stock chart of CAR Financial statements of CAR Annual reports of CAR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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