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When InvestingPro's Fair Value models identified Hertz Global Holdings (NASDAQ:HTZ) as significantly undervalued in October 2024, the car rental giant was facing substantial headwinds. The subsequent 47% return demonstrates how sophisticated valuation analysis can uncover opportunities even in challenging market conditions. While past performance doesn't guarantee future results, investors can discover similar opportunities through Investing.com's regularly updated Most undervalued list.
Hertz, operating one of the world's largest vehicle rental fleets, was trading at $3.05 when our Fair Value models flagged the stock's potential. Despite posting negative EBITDA of $1.09 billion and facing fleet modernization challenges, our analysis indicated the market had overcorrected, creating an attractive entry point for investors.
The company's stock had experienced significant volatility in the six months prior to our October signal, with monthly returns ranging from -41.9% to +15.6%. However, InvestingPro's comprehensive valuation methodology, which combines multiple analytical approaches, suggested a fair value significantly above the market price, with an estimated upside of 33.8%.
This analysis proved prescient as HTZ shares surged nearly 77% in November 2024 alone. While the stock has experienced some volatility since then, it currently trades at $4.14, delivering a total return of 47.2% for investors who acted on the initial signal. The company's fundamental picture has also shown signs of improvement, with EBITDA losses narrowing to $1.01 billion in recent reports.
Recent developments have supported our initial thesis. The company has undertaken several strategic initiatives, including new executive appointments and a $500 million senior notes offering to strengthen its financial position. While challenges remain, including fleet impairment charges that affected recent quarterly results, the core business fundamentals support our fair value assessment.
InvestingPro's Fair Value methodology succeeds by incorporating multiple valuation approaches, including discounted cash flow analysis, peer comparisons, and analyst consensus targets. This comprehensive approach helps identify situations where market prices significantly deviate from intrinsic value, as demonstrated in this case with Hertz.
For investors seeking to identify similar opportunities, InvestingPro offers access to these powerful valuation tools, along with real-time alerts and detailed financial analysis. The platform's track record with HTZ showcases how systematic valuation analysis can help investors make more informed decisions in today's complex market environment.