Hertz Global Holdings, Inc. (HTZ) is looking to expand its business beyond airport rentals while also capitalizing on opportunities from its acquisition of Dollar Thrifty Automotive Group, says Eric Kallen, President and Chief Investment Strategist at Hayek Kallen Investment Management LLC.
“Most of us know Hertz from the rental counters at the airport, but Hertz has begun to move beyond just that. Late last year they closed on an acquisition of Dollar Thrifty Automotive Group, which further consolidated the industry from six major players a few years ago to three today,” Kallen said.
HTZ has seen cost savings and cross-selling opportunities with the Dollar Thrifty acquisition, and is currently a reasonably priced stock that has the potential to benefit from not only the acquisition, but from its move to off-airport car rentals and firm pricing trends in the industry, Keller says.
“Hertz has been very active in moving into the off-airport rental car business. These rental arrangements are generally longer and more desirable than what is available at the airport. If Hertz can recognize reasonable synergies from their DTG acquisition, and the industry continues to see firmer pricing, then Hertz, at less than 11x 2014 earnings, looks very reasonably priced,” Keller said.
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