Avis Budget stock tanks after third-quarter profit falls 11%

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Avis Budget Group Inc. stock tanked in the extended session Thursday after the car-rental company posted an adjusted third-quarter profit well bellow market expectations.

Avis CAR, -1.49%  said it earned $189 million, or $2.50 a share, in the quarter, compared with $213 million, or $2.68 a share, in the year-ago period.

Adjusted for one-time items, Avis earned $223 million, or $2.96 a share, compared with $265 million, or $3.33 a share, a year ago.

Revenue fell slightly to $2.75 billion from $2.78 billion a year ago.

Analysts polled by FactSet expected adjusted earnings of $3.64 a share on sales of $2.84 billion.

Avis made “further progress” on partnerships with ride-hailing companies where it said it increased its ride-hail fleet by nearly 60% from the previous quarter.

“We remain focused on improving our core rental car business, while driving innovation to continue our transformation into a mobility service provider,” Chief Executive Larry DeShon said in a statement.

Avis guided for 2019 revenue between $9 billion and $9.2 billion, and an adjusted net income between $3.35 a share and $4.20 a share. The analysts surveyed by FactSet expect a 2019 adjusted profit of $3.96 a share on sales of $9.2 billion.

Avis and other car-rental companies have felt the pinch of people eschewing rentals in favor of ride-hailing and ride-sharing, as well as of an oversupplied used-car market. Car-rental businesses have to off-load thousands of vehicles they retire from their rental fleets.

Avis shares have gained 33% this year, compared with gains of 21% and 16% for the S&P 500 SPX, -0.30%  and the Dow Jones Industrial Average. DJIA, -0.52%