It is a well-known fact that car rental company Hertz Global Holdings Inc (OTCMKTS:HTZGQ) has been in a lot of trouble for quite some due to the problems brought about by the coronavirus pandemic and eventually landed in bankruptcy.
This haven’t prevent stock speculators from staying active in the stock. HTZGQ has risen from $1.07 to $1.75 over the last 30-days.
At this point, the HTZGQ shareholders are faced with a major dilemma going forward.
What to Expect
FREE CONFIDENTIAL REPORT
3 Stocks Set To Soar By January 1st, 2021
You have Successfully Subscribed!
It could now be a legitimate concern among investors that no money might be left to distribute once the existing debtors are dealt with. Hence, it is perhaps not a complete surprise that the Hertz stock experienced considerable volatility in recent times.
That being said, it is also necessary to keep in mind that since the final days of November, the Hertz stock has rallied by as much as 60%.
If there is any money left over after paying off the debtors, it could be possible for shareholders to make some profits from the stock. However, at the same time, it could be worthwhile to take a closer look at the important numbers before making any decision. In the third quarter, Hertz reported a cash balance of as much as $1.1 billion. In addition to that, it is necessary to keep in mind that the company also owns considerably valuable properties.
Properties include its fleet of vehicles, brand name, receivables, and real estate. All total, properties valued at as much as $17.6 billion in the third quarter financial results. The other factor to consider is the potential profits in the coming years and it goes without saying that it is quite difficult to project.
One of the ways of going about it is by using a method known as the ‘discounted cash flow’ method. As per estimates from analysts and under the assumption of the yearly rise in EBITDA margins of 12.7% up until 2024, Hertz will be worth $8.9 billion. It is less than the value of its vehicles and that represents an unfavorable scenario for investors.
If things improve and Hertz manages to clock an optimistic yearly EBITDA margin of 22%, then it would be valued at $19.6 billion. At this point, it could be a better idea to watch things closely and see the company’s liquidation value before investing in Hertz.
Disclaimer: We hold no positions in Hertz Stock.