These two car rental companies were mentioned in the Friday edition of Investors Business Daily in an article about stocks touching their 50 day moving averages. As this is a likely point to buy strong companies as they bounce off their moving average to move higher, I decided to take a look into the fundamentals of these companies. What can one say but “blah.” Lots of debt, poor margins, and vacillating earnings. As someone with the luxury of being a selective investor, this is an industry group I will pass up.
FleetCor Technologies is another company showing growing earnings and profit margins. All quarterly earnings are up significantly from the previous years quarter. FLT also has great return on assets and return on equity.
Analyzing this company has raised a few interesting questions. First, the large increase in shares contributed to a lower annual EPS number than the previous year, but diluted EPS still rose. In this situation, should you be concerned about the decreasing basic annual EPS, or does the fact that it is due to new stock issues mean it is not a big problem? Secondly, I find that the EPS numbers found in SEC fillings often differ from the numbers reported on sites like Businessweek. This must be due to adjustments in accounting methods used by the company and the financial services. The question is, who’s numbers should you pay more attention to?