CAR
Avis Budget Group, Inc.
$159.48
Distressed or Transitioning
75%
Current EPS × Depressed Multiple
Mild
·
Conviction
Overvalued
Trading 11.8% above fair value
You pay
$159.48
Bear
$95.07
Fair
$142.61
Bull
$190.14
Bear
$95.07
-40.4%
EPS continues to decline, 5x multiple
Fair
$142.61
-10.6%
Current EPS stabilizes, 8x multiple
Bull
$190.14
+19.2%
Credible recovery, multiple re-rates to 10x
Key Value Driver
Whether the core business model is intact or structurally impaired
Implied Market Multiple
8.2x
Summary
Our base-case estimate uses Current EPS × Depressed Multiple. We then blend that result with the average analyst price target of $129.83 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $142.61 per share.
Warnings
Don't assume past cash flow levels will return — the company's troubles may have permanently reduced its ability to generate profits.
A stock can look cheap on paper and still lose half its value if the underlying business is permanently damaged.
The wide range between our best and worst cases is intentional — pretending to know a precise value for a troubled company would be misleading.
Debt per share ($867.66) is more than half the stock price. With this much debt on a struggling business, the paths to recovery for shareholders are narrow.
Key Risks
- Bullish DCF projections are fundamentally unknowable for distressed companies
- M&A speculation can floor the stock above intrinsic value temporarily
- Management credibility is a key input — new CEO expands the bull case