Hertz plunges after withdrawing full-year outlook

It's been a rough road for the car-rental company. Analysts downgrade the stock after the news.

By MSN Money Partner Aug 20, 2014 2:14PM
Credit: © Oliver Berg/EPA

Caption: A Hertz service counter at Cologne/Bonn airportBy Nathan Vardi, Forbes

Hertz Global Holdings (HTZ) shares fell sharply on Wednesday after the rental car company withdrew its financial guidance for 2014. 

The company said earnings would be "well below the low end of its 2014 guidance" because of  "operational challenges" and costs related to its accounting review.

In other words, things are a mess at Hertz. The company's stock has been a favorite among prominent hedge fund managers like Glenview Capital Management's Larry Robbins, York Capital Management's James Dinan and Fir Tree Partners' Jeffrey Tannenbaum.


Shares of Hertz plunged by more than 11 percent in Wednesday morning trading to $27.95, but recovered to a 9.5 percent loss in the afternoon. The stock had previously risen in August to a 52-week high of $31.61.


Hertz said its rental car fleet had been hit by vehicle recall activity that had limited the number of cars it could rent to customers and operating expenses in its U.S. rental car operations had been higher than expected. 


The company pointed to delays in installing counter systems that have upended the immediate financial benefits it was hoping to obtain from its $2.3 billion purchase of Dollar Thrifty Automotive. It also said there had been continued soft demand in the equipment rental business.


The withdrawal of financial guidance for 2014 is just the latest issue disclosed by Hertz. In June, the company announced a review of its financial records after its audit committee had concluded that problems with the company's financial statements for the last three years would need to be corrected to reflect mistakes. Hertz had delayed filing its second-quarter financials amid the financial review. 


Earlier this year, the company found $46.3 million in out-of-period accounting mistakes in the past three years.


Analysts at JPMorgan (JPM) and Deutsche Bank (DB) downgraded Hertz's stock after the company withdrew its financial guidance.


More from Forbes


 

Tags: HTZ
1Comment
Aug 21, 2014 7:37AM
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In comes Icahn smelling death and a chance to make some cash selling the pieces and parts to other old farts. Icahn standing before St. Peter at the Pearly Gates- "What did you do for a living on Earth, Carl?" "I pooped on everything and all my transactions were smelly and disgusting." "We've got room for you below, Carl... you'll need this scrub brush. Satan diarrhea latrine needs eternal cleaning." 
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