Auto rental service provider Hertz Global Holdings Inc. (NASDAQ:HTZ) is constantly under pressure to perform in an inflationary environment coupled with internal control problems, which include wrongfully putting theft charges on customers.
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Just yesterday, the company announced a settlement claim worth $168 million for its wrongdoing toward customers. Following the news, HTZ stock lost nearly 3% on December 5. Year to date, HTZ stock has lost 33.9%.
The settlement covers 364 claims by customers who were wrongfully charged/imprisoned for rental car theft registered by Hertz. This figure represents roughly 95% of the pending claims and Hertz noted that insurance will take care of a majority of the claims. Thus, the claims resolution will not affect the company’s financials nor have a “material impact on its capital allocation plans for the balance of 2022 and 2023.”
Moreover, CEO Stephen Scherr, who took the reins of the company early this year, has assured customers that the company has put policies in place to mitigate the problem.
The company operates car rental services worldwide under the Hertz, Dollar, and Thrifty vehicle rental brands.
What is the Prediction for Hertz Stock?
On TipRanks, HTZ stock has a Moderate Buy consensus rating based on two Buys and one Hold rating. Also, the average Hertz Global stock prediction of $24.67 implies 50.7% upside potential to current levels.
Furthermore, Hertz trades at a forward price/sales multiple (P/S fwd) of 0.63x, much lower compared to the sector median of 1.28x. This implies that Hertz stock is currently undervalued and has significant room to grow.
