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Avis Budget Group Intrinsic Value: DCF (Earnings Based)

: $37.49 (As of Today)
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As of today (2021-10-19), Avis Budget Group's intrinsic value calculated from the Discounted Earnings model is $37.49.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Avis Budget Group's Predictability Rank is 2.5-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Avis Budget Group is -322.30%.

The historical rank and industry rank for Avis Budget Group's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

NAS:CAR' s Price-to-Intrinsic-Value-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.15   Med: 0.53   Max: 3.88
Current: 4.22

0.15
3.88

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Avis Budget Group was 3.88. The lowest was 0.15. And the median was 0.53.

NAS:CAR's Price-to-Intrinsic-Value-DCF (Earnings Based) is ranked lower than
99.99% of the 13 Companies
in the Business Services industry.

( Industry Median: 1.29 vs. NAS:CAR: 4.22 )

Avis Budget Group Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Avis Budget Group's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Avis Budget Group Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
Intrinsic Value: DCF (Earnings Based)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - - 28.19 59.19 -156.97

Avis Budget Group Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
Intrinsic Value: DCF (Earnings Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -75.34 -105.51 -156.97 -147.59 37.49

Avis Budget Group Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 8%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average earnings growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Earnings Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = $2.540.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, the Earnings Per Share without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Avis Budget Group's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)=Earnings per Share (Diluted)*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.08) = 0.97222222222222
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.08) = 0.96296296296296

Intrinsic Value: DCF (Earnings Based)=Earnings per Share (Diluted)*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Earnings per Share (Diluted)*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=2.540*14.7595
=37.49

Margin of Safety % (DCF Earnings Based)=(Intrinsic Value: DCF (Earnings Based)-Current Price)/Intrinsic Value: DCF (Earnings Based)
=(37.49-158.32)/37.49
=-322.30 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Avis Budget Group  (NAS:CAR) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


Avis Budget Group Intrinsic Value: DCF (Earnings Based) Related Terms

Thank you for viewing the detailed overview of Avis Budget Group's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.


Avis Budget Group Business Description

Avis Budget Group logo
Industry
Industrials » Business Services NAICS : 532111 SIC : 7514
Traded in Other Exchanges
Address
6 Sylvan Way, Parsippany, NJ, USA, 07054
Avis Budget Group Inc is a provider of automotive vehicle rental and car-sharing services. Its brands include Avis, Budget, and Zipcar. Avis is targeted to serve the premium commercial and leisure segments of the travel industry, while Budget is focused on value-conscious customers. The company operates its own network of rental locations and licenses its brands to franchisees. Zipcar is a car-sharing service that allows members to use the company-owned Zipcar fleet at an hourly rate. The company's largest region by revenue is the Americas.
Executives
Ferraro Joseph A. officer: President and CEO 6 SYLVAN WAY PARSIPPANY NJ 07054
Martins Izilda P officer: EVP, Americas 6 SYLVAN WAY PARSIPPANY NJ 07054
Sarma Karthik R. director, 10 percent owner ONE BRYANT PARK 39TH FLOOR NEW YORK NY 10036
Srs Investment Management, Llc director, 10 percent owner 1 BRYANT PARK 39TH FLOOR NEW YORK NY 10036
Hees Bernardo director, officer: Executive Chairman C/O THE KRAFT HEINZ COMPANY ONE PPG PLACE, SUITE 3200 PITTSBURGH PA 15222
Choi Brian J officer: EVP & Chief Financial Officer C/O SRS INVESTMENT MANAGEMENT, LLC ONE BRYANT PARK, 39TH FLOOR NEW YORK NY 10036
Rankin Patrick K officer: President, International 6 SYLVAN WAY PARSIPPANY NJ 07054
Lurie Glenn director C/O SYNCHRONOSS TECHNOLOGIES, INC. 200 CROSSING BLVD. BRIDGEWATER NJ 08807
Sparks Carl director 4315 NORTHAVEN ROAD DALLAS TX 75229
Krominga Lynn director 6 SYLVAN WAY PARSIPPANY NJ 07054
North John F officer: EVP & Chief Financial Officer 150 N. BARTLETT STREET MEDFORD OR 97501
Sera Jean M officer: SVP, GC & Corp. Sec. AVIS BUDGET GROUP 6 SYLVAN WAY PARSIPPANY NJ 07054
Fox Jeffrey H director ONE ALLIED DRIVE LITTLE ROCK AR 72202
Salerno F Robert director AVIS RENT A CAR INC 900 OLD COUNTRY RD GARDEN CITY NY 11530
Degenova Cathleen officer: Chief Accounting Officer 6 SYLVAN WAY PARSIPPANY NJ 07054

Avis Budget Group Headlines

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