Global car rental company Hertz (NASDAQ: HTZ) met Wall Street’s revenue expectations in Q3 2026, with revenue up 5.6% year on year to $2.62 billion. Its non-GAAP profit of $0.14 per share was 43.8% below analysts’ consensus estimates.

For more on Hertz, read our full research report, available free.

Revenue growth

Examining a company’s long-term performance can provide clues about its quality. Any business can post a good quarter or two, but the best consistently grow over the long haul. Hertz’s revenue grew at a mediocre 6.4% annualized rate over the last five years, falling short of the industrials sector standard.

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 shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Hertz grew its revenue by 5.6% year on year, and its $2.62 billion of revenue was in line with Wall Street’s consensus estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.6% over the next 12 months, according to S&P. Although this projection implies its newer products and services will drive stronger revenue growth, it is still below average for the sector.

Operating margin

Hertz was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.5% was weak for an industrials business. That outcome is unsurprising given its low gross margin baseline.

Analyzing the trend in its profitability, Hertz’s operating margin decreased by 31.4 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. Hertz’s poor performance shows that costs were rising and it couldn’t pass them on to its customers.

Earnings per share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share, or EPS, points to the profitability of that growth – for example, a company could inflate its revenue through excessive spending on advertising and promotions.

Hertz’s EPS declined by 61.9% annually over the last five years while its revenue grew by 6.4%. The company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

A closer look at Hertz’s earnings helps explain its performance. As noted earlier, Hertz’s operating margin declined by 31.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

As with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Hertz, its two-year annual EPS growth of 47.3% was higher than its five-year trend. Its improving earnings are an encouraging data point, but a caveat is that its EPS is still negative.

In Q3, Hertz reported adjusted EPS of $0.14, up from $0.12 in the same quarter last year. Despite growing year on year, this result missed analysts’ consensus estimates. Wall Street analysts’ consensus projections can also provide insight into expected EPS growth, but there is insufficient data.

Key takeaways from Hertz’s Q3 results

Hertz’s EBITDA and EPS both fell short of Wall Street’s consensus estimates, leaving few positives in a quarter that could have been better. Shares tumbled 9.5% to $2.07 immediately after the results.

Hertz may have had a tough quarter, but does that create an investment opportunity? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation when deciding whether to invest in this stock. For more on those factors, read the full research report here (it’s free).