3. Hertz Global Holdings Inc. (NASDAQ:HTZ)
Pershing Square’s Stake: $70 million
Forward P/E Ratio: 11.78
Hertz Global Holdings Inc. (NASDAQ:HTZ) is one of the largest rental car companies in America. Its shares are down by 17% over the past year and by 3.5% year-to-date. On May 7th, the firm reported its fiscal first-quarter earnings. The results saw Hertz Global Holdings Inc. (NASDAQ:HTZ) post $2 billion in revenue and $0.72 in loss per share to beat analyst revenue estimates of $1.88 billion and miss the loss estimate of $0.72. The revenue marked an 11% annual jump while the firm’s corporate operating income jumped by 47% to negative $161 million. Hertz Global Holdings Inc. (NASDAQ:HTZ) attributed the improvement to heftier revenue and lower depreciation expenses.
On March 6th, Morgan Stanley had discussed Hertz Global Holdings Inc. (NASDAQ:HTZ)’s shares. The bank adjusted the share price target to $5 from $5.5 and kept an Equal Weight rating on the shares. The coverage came after the fourth quarter earnings cycle as the bank remarked that it had cut estimates for Hertz Global Holdings Inc. (NASDAQ:HTZ) and others due to weaker than expected results.
Pershing Square discussed Hertz Global Holdings Inc. (NASDAQ:HTZ) in its end year 2025 portfolio update:
“Hertz is a leading vehicle rental provider in the early stages of a turnaround led by a strong management team. The company has successfully navigated a challenging period, reached important operational milestones, and is now profitable with a strengthened liquidity profile.
The company successfully completed its fleet refresh and is now in an enviable position with an average vehicle age of less than one year. This younger fleet has driven depreciation costs well below management’s target. Negotiations for this year’s vehicle purchases are also essentially complete, and the management team is confident that these agreements will support continued strong unit economics with depreciation remaining below target levels.
Operationally, Hertz has made significant strides, achieving 84% utilization this quarter, best-in-class amongst peers and the company’s highest level since 2018. These improvements led to its first profitable quarter in two years. We believe Hertz is on a clear path to delivering mid-single-digit EBITDA margins this year, with a line of sight toward achieving $1 billion in EBITDA in the coming years with continued growth afterwards. Over the course of this year, we see tangible demand drivers that support this growth trajectory including a recovery from the travel slowdown related to the trade war and government shutdown, fiscal stimulus, and the U.S. hosting of the World Cup this summer, which should lead to incremental volume and better pricing.”
