Rental Car Industry in Charts: Never Mind Zipcar – Look at Dollar Thrifty Automotive

Little Zipcar (ZIP) has gotten all the attention in the car rental industry of late, known as a game-changer for eliminating the rental agent and bringing its fleet of little cool cars direct to your hipster urban neighborhood. Great service, and very likely not such a great business, as YCharts reported earlier.

For investors, it may be that the current business model is just fine for the car rental industry – someone just needs to actually execute the model with rigor and discipline. Enterprise, the industry leader, might be doing that but it’s a moot point to investors because the company is privately-held. Too bad.

But dowdy little Dollar Thrifty Automotive Group (DTG) has lapped the car-rental field during the current economic rebound, and it’s making Hertz (HTZ) and Avis Budget (CAR), look slow-footed, as seen in this revealing stock chart.

DTG Chart

DTG data by YCharts

What’s the market rewarding Dollar Thrifty for? Making money, as seen in its superior profit margin.

DTG Profit Margin Chart

DTG Profit Margin data by YCharts

Apparently, economies of scale – at least, as practiced at Hertz and Avis – don’t mean much.

DTG Revenues TTM Chart

DTG Revenues TTM data by YCharts

Car rental is capital intensive, and in addition to attracting rental customers to maintain a high utilization of fleet, a company has to buy and sell the jalopies with some skill. Otherwise, your return on invested capital will suck, and you're nothing more than a sap for the likes of General Motors (GM), Ford (F) and Toyota (TM), in their quest to boost auto sales.

DTG Return on Invested Capital Chart

DTG Return on Invested Capital data by YCharts

Dollar Thrifty stock has already had quite a run and it’s PE ratio is now about 15, based on trailing earnings, which is high for a car rental outfit (when they have some earnings to compare to price). So it’s a bit pricey. And one would want to give its 10-K and such a thorough going-over before diving in. But it’s a company worth watching, as it’s making the competition look terrible.

Jeff Bailey is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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