Car rental services provider Avis (NASDAQ: CAR) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 4.1% year on year to $2.53 billion. Its GAAP loss of $8.01 per share was 6.7% below analysts’ consensus estimates.

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“We executed on the changes we outlined last quarter, and the first quarter reflects a meaningful inflection in our operating performance,” 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

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Avis Budget Group’s 18.5% annualized revenue growth over the last five years was incredible. 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 marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 1% over the last two years.

Avis Budget Group also discloses its number of available rental days - car rental, which reached 55.77 million in the latest quarter. Over the last two years, Avis Budget Group’s available rental days - car rental averaged 21.3% 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 reported modest year-on-year revenue growth of 4.1% but beat Wall Street’s estimates by 4.7%.

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

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Avis Budget Group has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.5%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Avis Budget Group’s operating margin decreased by 15.4 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 Q1, Avis Budget Group generated an operating margin profit margin of 30.3%, up 53 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.

Avis Budget Group’s earnings losses deepened over the last five years as its EPS dropped 13.7% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Avis Budget Group’s low margin of safety could leave its stock price susceptible to large downswings.

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

Sadly for Avis Budget Group, its EPS declined by more than its revenue over the last two years, dropping 61.2%. This tells us the company struggled to adjust to shrinking demand.

In Q1, Avis Budget Group reported EPS of negative $8.01, up from negative $14.35 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 Q1 Results

We were impressed by how significantly Avis Budget Group blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS missed. Overall, we think this was a decent quarter with some key metrics above expectations. The market seemed to be hoping for more, and the stock traded down 9.7% to $164.42 immediately after reporting.

Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).