Global car rental company Hertz (NASDAQ: HTZ) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.8% year on year to $2.48 billion. Its non-GAAP profit of $0.12 per share was 83.8% above analysts’ consensus estimates.

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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

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Hertz’s sales grew at a mediocre 6% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector 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 3.9% 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 3.8% year on year to $2.48 billion but beat Wall Street’s estimates by 3.1%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Operating Margin

Hertz has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.6%, higher than the broader industrials sector.

Looking at the trend in its profitability, Hertz’s operating margin decreased by 22.4 percentage points over the last five years. Many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction. We hope Hertz can emerge from this a stronger company, as the silver lining of a downturn is that market share can be won and efficiencies found.

This quarter, Hertz generated an operating margin profit margin of 19.4%, up 21.5 percentage points year on year. The increase was driven by stronger leverage on its cost of sales (not higher efficiency with its operating expenses), as indicated by its larger rise in gross margin.

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 15.8% 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 75.8%. 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 11.3%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings.

In Q3, Hertz reported adjusted EPS of $0.12, up from negative $0.68 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 Q3 Results

It was good to see Hertz beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 19.1% to $5.90 immediately following the results.

Sure, Hertz had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.