Global car rental company Hertz (NASDAQ: HTZ) beat Wall Street’s revenue expectations in Q4 CY2025, but sales were flat year on year at $2.03 billion. Its non-GAAP loss of $0.63 per share was 22.2% below analysts’ consensus estimates.
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Hertz (HTZ) Q4 CY2025 Highlights:
- Revenue: $2.03 billion vs analyst estimates of $2 billion (flat year on year, 1.5% beat)
- Adjusted EPS: -$0.63 vs analyst expectations of -$0.52 (22.2% miss)
- Adjusted EBITDA: -$205 million (-10.1% margin, 151% year-on-year decline)
- Adjusted EBITDA Margin: -10.1%, down from 19.7% in the same quarter last year
- Free Cash Flow was -$2.19 billion compared to -$332 million in the same quarter last year
- Market Capitalization: $1.38 billion
“Hertz sits on a stronger foundation today than we did one year ago,” said Gil West, Chief Executive Officer 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
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Hertz’s 10.1% annualized revenue growth over the last five years was solid. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Hertz’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 4.7% over the last two years. 
This quarter, Hertz’s $2.03 billion of revenue was flat year on year but beat Wall Street’s estimates by 1.5%.
Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Hertz has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.7%, higher than the broader industrials sector.
Looking at the trend in its profitability, Hertz’s operating margin decreased by 30.6 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.
This quarter, Hertz generated an operating margin profit margin of negative 11%, up 3.7 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
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Hertz’s full-year EPS turned negative over the last four years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Hertz’s low margin of safety could leave its stock price susceptible to large downswings.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Hertz, its EPS declined by more than its revenue over the last two years, dropping 153%. This tells us the company struggled to adjust to shrinking demand.
Diving into the nuances of Hertz’s earnings can give us a better understanding of its performance. A two-year view shows Hertz has diluted its shareholders, growing its share count by 30.4%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. 
In Q4, Hertz reported adjusted EPS of negative $0.63, up from negative $1.18 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Hertz to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.97 will advance to negative $0.65.
Key Takeaways from Hertz’s Q4 Results
It was good to see Hertz narrowly top analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 7.5% to $4.14 immediately following the results.
Hertz’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
