Q2 Earnings Beat Couldn’t Halt Hertz Stock HTZ Downtrend but Support Might
Even if Hertz's second-quarter earnings exceeded expectations, the company's stock price is still under pressure due to persistent problems
Quick overview
- Hertz reported better-than-expected Q2 results with revenue of $2.19 billion, but still faced a 7.1% year-on-year decline.
- Despite improvements in adjusted EPS and operating margins, free cash flow plummeted to -$2.7 billion, raising liquidity concerns.
- The company's stock has been in a downtrend since 2021, with recent earnings not enough to shift negative investor sentiment.
- Long-term growth remains a concern, as Hertz's sales have only grown at a compounded annual rate of 1.7% over the past five years.
Even if Hertz’s second-quarter earnings exceeded expectations, the company’s stock price is still under pressure due to persistent problems revealed by the underlying data.
Stock Performance Overview
Hertz Global Holdings (NASDAQ: HTZ) has been trapped in a persistent downtrend since 2021, with intermittent bursts of buying momentum proving short-lived. The brief recovery seen in April faded quickly, and the stock has since resumed its downward trajectory.
HTZ Chart Weekly – The Decline Stalled at the 200 SMA Today
The latest earnings report, despite containing several positive surprises, has not been enough to change investor sentiment. Shares fell nearly 3% today, extending a steep 25% decline recorded last week, signaling that market participants remain unconvinced of a sustained turnaround. The level where the decline might come to an end is around $5 where the 50 weekly SMA (yellow) stands. It used to act as resistance so now it will likely shift to support.
Q2 CY2025 Financial Results
In the second quarter of calendar year 2025, Hertz’s revenue came in at $2.19 billion, slightly ahead of analyst expectations of $2.16 billion. However, this figure marked a 7.1% decline compared to the same period last year, underscoring ongoing demand pressures in the rental market. The company reported a non-GAAP loss of $0.34 per share, which was a meaningful improvement compared to consensus forecasts of a $0.41 loss. Operating margins also showed modest progress, improving to -14.5% from -17.3% a year earlier, reflecting better cost control and efficiency measures.
However, free cash flow painted a less encouraging picture, plunging to $-2.7 billion from $-553 million in the previous year’s second quarter. This significant deterioration raises concerns about liquidity, capital management, and the company’s ability to finance ongoing operations without further strain.
Hertz (HTZ) Q2 CY2025 Highlights
- Revenue: Reported revenue of $2.19 billion, surpassing analyst estimates of $2.16 billion by 1.3%. Despite this beat, revenue declined by 7.1% year-on-year, reflecting ongoing challenges in the rental market.
- Adjusted Earnings Per Share (EPS): The company posted an adjusted EPS loss of $0.34, which was a notable 17.4% improvement compared to analyst expectations of a $0.41 loss.
- Adjusted EBITDA: Hertz reported an adjusted EBITDA of $1 million, significantly beating analyst estimates of a negative $34.67 million. This resulted in a break-even margin of 0%, marking a substantial operational improvement.
- Operating Margin: The operating margin improved to -14.5%, compared to -17.3% in the same quarter last year, signaling better cost control and operational efficiency despite continued losses.
- Free Cash Flow: Free cash flow showed a considerable decline to -$2.7 billion, a sharp drop from -$553 million in the same quarter the previous year. This indicates increased cash outflows, potentially due to investments or debt servicing.
- Market Capitalization: Hertz currently holds a market cap of $1.72 billion, reflecting market sentiment and the company’s ongoing restructuring efforts.
Long-Term Growth Concerns
Looking at the bigger picture, Hertz’s performance over the past five years has been underwhelming. The company’s sales have grown at a compounded annual growth rate of just 1.7%, falling short of both industry averages and investor expectations. This sluggish growth rate represents a challenging starting point for any sustainable turnaround strategy, especially in an increasingly competitive rental and mobility sector where innovation and adaptability are critical.
Investor Outlook
The mixed nature of Hertz’s Q2 report leaves the market at a crossroads. On one hand, the revenue and earnings beats indicate that operational adjustments are delivering measurable benefits. On the other hand, the sharp deterioration in free cash flow signals deeper structural issues that cannot be ignored.
Investors are likely to remain cautious until the company demonstrates consistent progress in managing cash burn, strengthening its balance sheet, and delivering steady top-line growth. Until then, Hertz’s share price may continue to face pressure despite occasional earnings-driven rallies.
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