Hertz (NASDAQ:HTZ) Surprises With Q2 Sales, Stock Soars

Global car rental company Hertz (NASDAQ:HTZ) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 7.1% year on year to $2.19 billion. Its non-GAAP loss of $0.34 per share was 17.4% above analysts’ consensus estimates.

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“Our transformation is taking hold,” said Gil West, CEO of Hertz.

Company Overview

Started with a dozen Model T Fords, Hertz (NASDAQ:HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Hertz grew its sales at a sluggish 1.7% compounded annual growth rate. This fell short of our benchmarks and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Hertz’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.2% annually. Hertz isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Hertz’s revenue fell by 7.1% year on year to $2.19 billion but beat Wall Street’s estimates by 1.3%.

Looking ahead, sell-side analysts expect revenue to decline by 1% over the next 12 months, similar to its two-year rate. While this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.

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Operating Margin

Hertz was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Hertz’s operating margin decreased by 21.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. We’ve noticed many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction, but Hertz’s performance was poor no matter how you look at it. It shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, Hertz generated an operating margin profit margin of negative 14.5%, up 2.8 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Hertz’s full-year earnings are still negative, it reduced its losses and improved its EPS by 3.3% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Sadly for Hertz, its EPS declined by more than its revenue over the last two years, dropping 79.8%. This tells us the company struggled to adjust to shrinking demand.

We can take a deeper look into Hertz’s earnings to better understand the drivers of its performance. While we mentioned earlier that Hertz’s operating margin expanded this quarter, a two-year view shows its margin has declined by 32.7 percentage points. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, Hertz reported adjusted EPS at negative $0.34, up from negative $1.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Hertz’s Q2 Results

We were impressed by how significantly Hertz blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 6.2% to $5.93 immediately after reporting.

Indeed, Hertz had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.