Vehicle rental giant Hertz (HTZ, $18.11) and its board of directors have approved a new $2 billion share repurchase program. The new authorization is in addition to the $2.0 billion share repurchase program announced in November 2021. With approximately $0.2 billion remaining under the previous authorization. The company, in total, has purchased 88 million shares since it began its repurchasing journey. Shares gained more than 8% upon the news breaking despite it tumbling by 31% overall in the year to date.
With about $200 million remaining in the previous buyback program, the company can now repurchase up to $2.2 billion worth of its stock, representing about 31% of Hertz's market capitalization of $7.10 billion at Tuesday's stock closing prices. "The increased authorization underscores the confidence that management and the board have in the direction of the company," said Chief Executive Stephen Scherr. In addition, Hertz had corporate liquidity of $2.7 billion as of March 31st, including $1.5 billion in unrestricted cash.
Why it matters
The auto rental market is entering a key period of business - with the summer months usually a boon time with families going on staycations and cross-country road trips. However, rental companies should be mindful of the chip shortage somewhat easing and the vehicle market finding its feet again. However, Hertz has looked to stay in favour with green-conscious drivers by adding a fleet of Teslas to its offerings.
