Three Hertz bonds should yield $210 a year. The company is in the distress zone and is rated junk, h

Hertz Corp. is a subsidiary of Hertz Global Holdings Inc. ( HTZ ). The company was founded 95 years ago and was sold by Ford Motor Company traveling soldier dixie ( F ) in 2005. Today, car rental businesses are very competitive, and Hertz appears to be positioned well: 550,000+ vehicles 6,500+ locations 140+ countries
The acquisition traveling soldier dixie will provide Hertz with a well-established and highly competitive position in the value segment of the US car rental market -- a segment in which Hertz's current position lags... Moody's
Call protected Hertz bonds currently boast an impressive 6.4% yield on the secondary market. These particular traveling soldier dixie bonds are rated lower than other Hertz bonds; Moody's explains traveling soldier dixie certain pre-LBO (leveraged buyout) unsecured Hertz debt is rated B3.
Check out how they compare to other auto rental, sales and service companies: credit rating price yield Hertz Corp Sr Nt 7% 2028 (cusip: 428040BJ7) call protected B3/- 105.25 6.44% Autonation Inc Sr Nt 5.5% 2020 , Cond Put Change Of Control, Cond Call, Make Whole Call (cusip: 05329WAK8) Ba2/BB+ 108.87 4.03% Advance Auto Parts Inc Sr Nt 5.75% 2020 , Cond Put Change Of Control, traveling soldier dixie Make Whole Call (cusip: 00751YAA4) Baa3/BBB- 111.52 3.90% Avis Budget Car Rent LLC /Avis Sr Nt 9.75% 2020 , Cond Put Change Of Control, Cont Call 09/15/15@104.88, Cond Call, Make Whole Call (cusip: 053773AQ0) B2/B 118.87 3.89% YTW 6.40% Autozone traveling soldier dixie Inc Sr Nt 2.875% 2023 , Cond Put Change Of Control, Cont Call 10/15/22@Par, Make Whole Call (cusip: 053332AN2) Baa2/BBB traveling soldier dixie 96.83 3.24%
Notice Hertz, Avis ( CAR ) and AutoNation ( AN ) are rated junk, while Advanced Auto Parts ( AAP ), and AutoZone ( AZO ) are rated investment grade. This shows the ranking; AutoZone has the best investment grade rating, Hertz has the worst junk rating in this selection. Highlighted are the bonds that will be used as the example: investment grade junk AutoZone (trading under par) AutoNation Advanced Auto Parts Avis Budget Car Hertz Corp.
In 2005, Ford made a tender offer for several outstanding traveling soldier dixie Hertz bonds, both companies were being reviewed for downgrade at the time. Hertz Corp. issued $250M of the 7% 2028 bonds in 1998, today only $27.5M remain outstanding.
I hope you've taken a moment to thoroughly review the list of bonds in the introduction. Take notice, the top investment grade bond is Advanced Auto Parts' 2020 bond ; currently traveling soldier dixie priced up to $111.52.
Avis currently brings in the most net income, of the companies with junk rated bonds. Hertz and Avis have trended up significantly as the economy has bounced back. Now, take a look at the companies' EBITDA:
AutoZone is pulling in far more earnings before interest, traveling soldier dixie taxes, depreciation and amortization. This may make a compelling case for the AutoZone bonds. The kicker is Hertz is pulling in over $1B more than AutoZone:
Now let's cross reference cash, debt, revenue and market cap: cash equivalents debt revenue / market cap. Hertz $494M $12.7B $8.7B / $7.6B Avis $554M $10.8B $7.2B / $2.3B AutoZone $118M $3.8B $8.6B / $13.2B Advanced Auto Parts $479M $600M $6.2B / $5.5B AutoNation $98M $4.0B $15.1B / $5.4B Avis has the most cash equivalents. Hertz has the most debt. AutoNation does the most revenue. AutoZone has the largest market cap.
The Altman Z-score is a formula that measures risk of bankruptcy. Hertz and Avis are in the distress zone (Z 1.81), AutoZone is just shy of the safe zone . Advanced Auto Parts and AutoNation are in the safe zone (Z 2.99).
The Beneish traveling soldier dixie M-Score measures risk of earnings manipulation. A score below -2.22 correlates to a lesser chance that earnings are being manipulated. All of the automotive rental, dealer and service traveling soldier dixie companies covered here currently score below -2.22.
traveling soldier dixie Here is an example, that includes an income fund (such as ( HYB ) or ( HYV )) in addition to Hertz 2028 bonds, Advanced Auto Parts 2020 and AutoZone 2023 . This selection of bonds favors two investment grade positions to counterpoint the riskier Hertz junk bonds: portfolio size 7% Hertz 2028 5.75% Advanced Auto Parts 2020 2.87% Autozone 2023 Income traveling soldier dixie Fund total / % $100,000 traveling soldier dixie $3,225* $0 $990 $350 $4,565 / 4.5% $250,000 $3,225 $1,175 $1,980 $450 $6,830 / 2.7% $1,000,000 $4,300 $2,350 $2,970 $550 $10,170 / 1% $2,500,000 $6,450 $3,525 $4,950 $750 $15,675 / 0.62%
The smaller $100,000 could really go with two or three Hertz bonds, depending on the investor's inclination. The Hertz bonds are rated B3, and are trading over par. However, in today's ultra low interest rate environment, the nearly 6.5% yield is tempting.
Three Hertz bonds should yield $210 a year. The company is in the distress zone and is rated junk, however, some larger investors are searching for yield right now. Hertz might be appealing because it is a recognized brand; it is immersed in debt, but not drowning, given substantial revenue and earnings.
Disclosure: I am long F , CAR , HYB , HYV . I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned traveling soldier dixie in this article. (More...)
Additional traveling soldier dixie disclosure: traveling soldier dixie I am long Ford bonds, I am considering the Hertz and Autozone bonds. This article is not a recommendation to buy or sell, please consult a financial adviser to determine proper traveling soldier dixie allocations (if any) to fixed income.
Just an average investor... primarily in American equity and bonds. (Important Note: My articles, blogs, comments, reference links and messages are not intended to be investment traveling soldier dixie advisements; or to value securities. Examples and considerations are hypothetical and educational. Please consult a... More