What Is The One Risk Every Avis Budget Investor Should Know? Trefis Team Wed, November 11, 2026 at 8:06 PM EST 4 min read CAR +1.56% ^GSPC +1.31% HTZ +4.67% UHAL -0.12% R +0.20% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Avis Budget (CAR) shares climbed 18.1% in the month to November 10, outpacing a 3.6% drop in the S&P 500. A shareholder might think the hardest part is over, but management's own figures offer less comfort. On its November 4, 2026 call, management said third-quarter adjusted EBITDA, its main profit measure, landed roughly $50 million below what it had expected in July. What went wrong, and is it still going on?
Avis Budget Fell Short As Fewer People Traveled
Management pointed to weaker-than-expected demand, particularly in August, as the main reason for the shortfall. The slide is evident in air travel. U.S. airport passenger volumes counted by the TSA fell 0.7% in the second quarter of 2026 and 2.8% in the third. Management said the third-quarter drop was the steepest since the first quarter of 2021, and travel into the U.S. from abroad was weaker still, falling 8%.
Avis Budget faced weak demand in the second quarter too. At the time, gains from selling cars out of a shrinking fleet made up for the lost rentals. The third quarter is a weaker season for selling used cars, however, and management said those gains were not enough to cover the rentals it lost. Costs in the Americas also failed to fall as fast as demand, which management said cost about $14 million in the quarter. The weakness has not ended. Management said TSA check-ins remain down from a year earlier, though the decline has moderated.
How Much Of Avis Budget Does Weaker Travel Reach?
Weaker travel weighed most on the Americas, where third-quarter revenue fell 3% from a year earlier to $2.55 billion, management said. International revenue, excluding exchange rate effects, slipped 1%, but adjusted for the closure of Zipcar U.K. it grew 0.8%, with rental days down 1.7%. Management tied that drop in rental days to last year's network restructuring and customer mix changes.
For the whole company, third-quarter revenue was $3.46 billion, down 2.4% from a year earlier, and profit fell faster than sales. The operating margin dropped to 12.5% from 16.9% in the third quarter of 2025. Sales fell from a year earlier in each of the latest two quarters.
Avis Budget faces this with a heavy load of debt. Its total debt equals 645.2% of its market value, against 19.0% for the S&P 500, and management said it will keep prioritizing debt reduction. It said corporate debt will be about $5.7 billion by year-end, against total debt of $28.3 billion at September 30. Management said it also raises separate vehicle financing, such as the asset-backed debt it issued in September.
The share price looks low against sales, but much of that reflects the heavy debt. The stock lost 13.4% over the year to November 10, while the S&P 500 returned 13.1%. Avis Budget trades at 0.373 times sales, against 3.2 for the S&P 500. Over the past decade, its price-to-sales ratio has run from 0.111 in March 2020 to 1.3 in March 2022.
How Worried Should An Avis Budget Holder Be?
Worried enough to keep watching, because the risk is real and has not passed. Management said it does not see volume as a tailwind in the fourth quarter, so it is counting on charging more per rental day rather than renting more cars.
Revenue per rental day was already up nearly 4% from a year earlier as September ended, management said, and bookings for October and November were tracking at similar levels. Management expects fourth-quarter adjusted EBITDA of about $165 million, against $5 million a year earlier. It credited mostly factors within its control: a fleet now sized for current demand, lower per-unit fleet costs, cost actions underway and the pricing momentum built in September. Yet it now expects full-year adjusted EBITDA of about $850 million, the low end of the range it gave in July.
Avis Budget stock has also fallen further than the S&P 500 in past market shocks. Of the five market shocks since 2022 that Trefis measures, the deepest fall came in the 2025 tariff shock, when the stock fell 41% against 19% for the S&P 500.
Rental days, down nearly 3% in the Americas in the third quarter, are the number to watch when Avis Budget reports in February 2027.
Beyond CAR: A Systematic Way To Invest
Before you decide on CAR, consider a better choice. Since its September 2020 launch, the Trefis High Quality (HQ) Portfolio has returned 105%, ahead of a benchmark that combines the S&P 500, S&P MidCap and Russell 2000, without betting on one stock.
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