Europcar shares: Price analysis before buying or selling

Elements to consider before selling or buying Europcar shares

Analysis N°1

Data from the air transport sector, which accounts for almost 40% of turnover.

Analysis N°2

Advertisements and statements from its competitors, including Avis.

Analysis N°3

The cyclical nature of the business, with gross operating surplus always stronger in the second and third quarters.

Analysis N°4

The implementation of the Fast Lane strategy, which is based on new services and long-term strategic acquisitions or partnerships and requires more than 80 million euros of investment.

Analysis N°5

The consolidation of acquisitions in Europe, but also the strategy of international expansion outside Europe led by the group.

Analysis N°6

The evolution of the market shares of the competition and in particular of the companies surfing on the services between individuals.

Analysis before buying or selling Europcar shares

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General presentation of Europcar

In order to be able to evaluate the Europcar group's action, let's start by giving a quick overview of the activities carried out by this group.

The Europcar group is a French group specialising in car rental. It is currently the leader in this sector in Europe. Europcar offers short and medium-term vehicle rental services to both private and business customers. It rents passenger cars and commercial vehicles under the Europcar and InterRent brands in the low-cost segment of this sector. To better understand the group's activities, they can be divided into different divisions according to the share of turnover generated, as follows:

Vehicle rental is of course the largest part of the Europcar group's business, accounting for nearly 93.5% of total revenues. This activity is conducted through various rental agencies that are either directly operated by the group or by independent agents.

Another of the Europcar group's activities is the provision of services, which accounts for nearly 4.4% of the group's revenues.

Finally, the remaining 2.1% of Europcar's revenues relate to royalties received by franchisees.

As its name suggests, Europcar currently concentrates its activities in Europe, where it generates 92.8% of its revenues.

The major competitors of Europcar

The Europcar group is currently one of the largest companies in its sector. However, it also has to contend with some major rivals, as other companies are also very well positioned in this market, and we would like to give you an insight into them here:

Avis

First of all, the Avis Rent a Car group is an American company specialising in the car rental sector. It is one of the subsidiaries of the Avis Budget Group which manages the Avis brand. The group is currently present in 163 countries and has over 5,000 rental agencies worldwide.

Rent a Car

This other French company is also specialised in the rental of commercial and private vehicles and is particularly specialised in short-term rental in the local market. The group operates a network of more than 200 franchised agencies, 90 branch offices and subsidiaries and 190 relay points in mainland France, the French overseas territories and Morocco.

Hertz Global Holding

Another serious competitor of the Europcar group is of course the giant Hertz Global Holdings, an American company also specialising in the vehicle rental sector. This company owns several major brands in this sector, in part or in full, and is currently the world leader in this sector with more than 9,700 rental sites in 146 countries around the world. The company currently employs over 37,000 people and has been led by Paul Stone since May 2020. Although the Hertz Group's business has changed significantly over the years, its core business remains vehicle rental.

Sixt SE

Finally, the last direct competitor of the Europcar Mobility group is the Sixt SE group. This is a holding company based in Germany that offers mobility services to companies and individuals. The company operates through the Mobility business unit, which runs its own rental offices in cooperation with franchisees and cooperation partners. The company's product portfolio includes SIXT Rent, SIXT Share, SIXT Ride and SIXT+, which offer an integrated mobility service in the areas of car rental, car sharing, driver services and car subscriptions. The group's products can thus be booked through a single application that also offers the services of its mobility partners. The company is present in about 100 countries worldwide.

The major partners of Europcar

The partnerships and strategic alliances that Europcar is developing with other companies are important elements to take into account when analyzing this value. To better understand the value of following these announcements, here are two recent examples of major partnerships implemented by Europcar.

Franchise of North America Inc

First and foremost and in 2013, the Europcar group signed a strategic partnership with the Franchise of North America Inc group which is notably the owner of the Advantage brand and operates in the United States. The two companies have joined forces to offer joint services to their customers. This alliance strengthens Europcar's strategic positioning in the rapidly expanding US market and completes its range of innovative mobility solutions by responding more effectively to the needs and expectations of its customers.

Air Caraïbes

More recently, in 2016, Europcar set up a strategic commercial partnership with the airline Air Caraïbes. This agreement, signed for a period of 3 years, aims to provide Air Caraïbes passengers with a flexible and quality service during their customer journey by integrating car rental into the flight reservation systems. In addition to allowing these passengers to book their rental car at the same time as their flight, this system allows them to benefit from advantageous pricing on this rental. For Europcar, the advantage is of course a new distribution channel and greater visibility.

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The factors in favour of a rise in the Europcar share price:

First of all, it should be remembered that the Europcar group is the European leader in vehicle rental with no less than 19% of the market share and is also ranked third in the world in this sector.

The group's international expansion strategy is also paying off, as Europcar offers its services in France, Germany, Australia, Belgium, Spain, Italy, New Zealand, Portugal and the United Kingdom, and also has franchises in other countries.

The company is also currently benefiting from a favourable market, particularly due to the declining need for car ownership among individuals and companies in Europe.

The fact that the Europcar group relies on buy-back programs for the management of the vast majority of its fleet is also an advantage since it greatly reduces exposure to the risk of an economic crisis.

We also appreciate the many partnerships that Europcar has set up with companies in the transport and tourism sectors, which enable it to gain visibility and generate a large share of its turnover.

Finally, investors are also reassured by the group's rather healthy financial situation, which was notably strengthened during its 2015 IPO and the renegotiation of its debt in 2016.

The factors in favour of a drop in the Europcar share price:

First of all, it should be remembered that the sector in which Europcar operates is particularly subject to competition and is also changing rapidly with the growing success of car-sharing and car-pooling companies.

The group has also had to lower its rates in recent years, particularly because of online bookings, which now account for nearly 50% of rentals.

Another of the group's shortcomings is its heavy dependence on European activities, with only 8% of its revenues generated outside the EU.

Finally, it should also be noted that the Europcar group's activities and profitability depend to a large extent on the interest rates of the debt used to finance its vehicle fleet, which is recorded off-balance sheet.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

On which main index and which secondary indexes is the Europcar share listed?

Europcar shares are of course included in several benchmark stock market indices. The company is included in the CAC All Shares index, which is its main index, but also in other secondary indices such as the CAC All Tradable index, the CAC Mid 60 index, the CAC Mid Small index, the Next 150 index, the PEA index and the SBF 120 index. This tells us about the size of its market capitalization.

What are the latest results published by Europcar?

The latest financial results published by the Europcar group concern the financial year 2019. Thus, we know, among other things, that for this fiscal year, the group achieved a net profit of 30 million euros. Its equity also amounts to 838 million euros. As regards its share price on the stock market, the 2019 PER is 1.51 with a dividend paid at 0.08 and a yield of 0.57. You can of course find the details of these results directly on the company's website.

What should I look out for in the news of the group?

In order to make relevant analyses of the Europcar share price, you should of course be interested in major strategic transactions such as partnerships, the signing of commercial contracts, takeovers or even business disposals. But events and publications concerning its sector of activity in general should also be followed closely, as they can also influence the stock.

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Analysis before buying or selling Europcar shares