Hertz 1Q07 Earnings Preview: Wary of Consensus Figures

| About: Hertz Global (HTZ)

After the market closes on April 25, 2007, Hertz (NYSE:HTZ) will tell investors how many vehicles (and equipment) they rented in January, February and March of 2007 (the first quarter).

A group called Zack's polled 6 analysts that write investment research on Hertz and came to the conclusion that on average, these analysts expect Hertz to lose about $0.03 a share in the first quarter. And for all of 2007, according to the Zack's survey, they expect Hertz to earn $1.01.

I'd be very careful with the above "consensus" figures. Hertz is new to the public equity markets and as I have discussed before, you've therefore got a lot of noise in the reported data and forecasts. What I can tell you, is that on Hertz's last conference call, that after you adjust out for a lot of this noise, management expects the company to earn somewhere between $1.15 to $1.22 a share.

The 2007 earnings goal is based on the company collecting about $8.5 billion to $8.6 billion (in what we call revenues) from folks that rent cars and equipment from Hertz throughout the world. If management achieves this revenue goal in 2007, they will have about 5% - 7% more sales than what they had in 2006.

Hertz was not public and was not in the autoretailstocks index last year in the first quarter, so I do not have comments to share with you from last year.

But I will tell you one of the things I will be interested to learn more about on the conference call is the company's recent announcement to begin offering hourly rentals in New York. Many of you have heard me discuss this emerging trend for the last six months or so. Remember, if successful, it begins to change the very nature of the auto industry. Essentially it can increase the total pie for rental car companies (and almost become a competitor to franchised car dealers) as the very concept of vehicle ownership in metro markets changes. So I am very curious how well the company's first couple weeks (and announcement) are being received.

The conference call will be at 10:00am (eastern) on April 26, 2007. The dial in number is 888-428-4470.

HTZ 1-yr chart:

HTZ 1-yr chart