Car rental services provider Avis (NASDAQ: CAR) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 1.3% year on year to $3.00 billion. Its GAAP profit of $0.98 per share was 46.9% below analysts’ consensus estimates.

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“The second quarter demonstrated how we are operating the business differently: as booking trends shifted, we moved quickly to resize fleet, protect utilization and returns, and deliver Adjusted EBITDA in line with our initial expectations,” said Brian Choi, Avis Budget Group CEO.

Company Overview

The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ: CAR) is a provider of car rental and mobility solutions.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Avis Budget Group’s 12% annualized revenue growth over the last five years was excellent. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Avis Budget Group’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years.

Avis Budget Group also discloses its number of available rental days - car rental, which reached 60.48 million in the latest quarter. Over the last two years, Avis Budget Group’s available rental days - car rental averaged 17.6% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company’s monetization has fallen.

This quarter, Avis Budget Group missed Wall Street’s estimates and reported a rather uninspiring 1.3% year-on-year revenue decline, generating $3.00 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 1.9% over the next 12 months. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Avis Budget Group has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Avis Budget Group’s operating margin decreased by 18.9 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, Avis Budget Group generated an operating margin profit margin of 36.3%, up 29.9 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Avis Budget Group, its EPS declined by 55.5% annually over the last five years while its revenue grew by 12%. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.

Diving into the nuances of Avis Budget Group’s earnings can give us a better understanding of its performance. As we mentioned earlier, Avis Budget Group’s operating margin expanded this quarter but declined by 18.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Avis Budget Group, its two-year annual EPS declines of 69.1% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q2, Avis Budget Group reported EPS of $0.98, up from $0.11 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Avis Budget Group’s Q2 Results

We were impressed by how significantly Avis Budget Group blew past analysts’ EBITDA expectations this quarter. On the other hand, its revenue missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 14.6% to $142.00 immediately after reporting.

Avis Budget Group’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).