Top-level insiders tend to have a good understanding of their companies’ prospects. If they’re buying company stock, it’s generally a sign that they’re confident about the future and that they expect to see the stock move higher.
In this report, we are going to highlight some interesting insider buying at Avis Budget Group Inc (CAR:US). Avis Budget Group is the parent company of Avis Car Rental, Budget Car Rental, Budget Truck Rental, and Zipcar. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $8.64 billion.
Avis Budget Group: Insider Buying
Our data shows that on May 18, Avis Budget Chairman Bernando Hees bought 26,000 shares at a price of $189.90 per share. This trade cost the insider $4.9 million and increased his holding to 422,142 shares.
This trade is worth highlighting for a couple of reasons. Firstly, it’s large. The fact that Mr. Hees has spent nearly $5 million on stock suggests he’s confident it’s going higher.
Secondly, Mr. Hees – who was previously a Partner at 3G Capital from 2010 to 2019 – has made some well-timed purchases in the recent past. In May 2021, for example, he snapped up 63,000 Avis Budget shares when the stock was trading under $80. Since then, it has climbed above $300 on several occasions.
Avis Budget’s recent Q1 results showed that the group is making a good recovery after the pandemic.
For the quarter, revenue came in at $2.4 billion, up 77% year on year. Meanwhile, adjusted EBITDA was $810 million – the group’s highest first quarter adjusted EBITDA in its history. Non-GAAP adjusted earnings per share amounted to $9.99 versus a loss of $0.46 per share a year earlier.
At the end of the quarter, the group had a strong liquidity position, with cash and cash equivalents of $550 million on the balance sheet, and an additional $1.7 billion of fleet funding capacity.
On the back of this performance, the board approved a $1.0 billion and $2.0 billion increase to its existing share repurchase authorizations, bringing its available authorization under the stock repurchase program to $2.3 billion.
“Despite the impact of Omicron on the first half of the quarter, our team was able to quickly pivot to manage the significantly increasing demand during the back half of the quarter,” said CEO Joe Ferraro. “We focused on diligent fleet management and continued cost optimization to generate a new record first quarter Adjusted EBITDA,” he added.
In light of this solid performance, we see the insider buying here as a bullish indicator.