Hertz Global Holdings' Strategic Turnaround: A Resilient Reentry in a Transformed Mobility Landscape

In the shadow of the post-pandemic travel rebound, Hertz Global Holdings (HTZ) has emerged as a case study in corporate reinvention. Once a casualty of the 2020 bankruptcy crisis, the company has executed a strategic overhaul that aligns with shifting consumer behaviors, inflationary pressures, and the rise of alternative mobility solutions. This article examines Hertz's operational and financial resilience, evaluates its market valuation, and assesses whether the stock's current price reflects its long-term repositioning potential.

Operational Resilience: Fleet Optimization and Cost Discipline

Hertz's “Buy Right, Hold Right, Sell Right” strategy has been pivotal in reshaping its fleet management. By 2025, the company achieved a depreciation per unit per month (DPU) of $251, a 16% improvement over its $300 target. This metric, critical for asset-heavy industries, underscores Hertz's ability to mitigate inflationary headwinds through smarter procurement and retention practices. Vehicle utilization has also surged to 83%, a 300-basis-point increase year-over-year, driven by a younger fleet (80% of U.S. rentals are less than a year old) and agile demand forecasting.

Cost control has further bolstered margins. Direct operating expenses (DOE) declined 3% year-over-year, while DOE per transaction day improved sequentially. These gains reflect Hertz's disciplined approach to labor, maintenance, and supply chain management. Meanwhile, the company's foray into direct-to-consumer used car sales—its highest second-quarter volume in five years—has diversified revenue streams and capitalized on pent-up demand for affordable vehicles.

Financial Turnaround: From Losses to EBITDA Positivity

Hertz's financial trajectory has been nothing short of remarkable. After reporting a $865 million net loss in Q2 2024, the company turned in a $294 million loss in Q2 2025—a 66% improvement. More notably, it posted its first positive Adjusted Corporate EBITDA in nearly two years at $1 million, a stark contrast to the $460 million deficit in the prior-year period.

Liquidity has also strengthened, with $1.45 billion in cash reserves as of June 2025. This financial flexibility positions Hertz to invest in growth initiatives, such as expanding its EV fleet under the Inflation Reduction Act's tax incentives, or to weather macroeconomic volatility. However, the company's debt load remains a concern, with total debt at $17.6 billion as of Q2 2025.

Market Valuation: Undervalued Potential or Overlooked Risks?

Despite these strides, Hertz's valuation metrics remain unorthodox. Its P/E ratio is negative due to ongoing losses, and its EV/EBITDA is effectively undefined given the company's near-zero EBITDA. By comparison, industry peers like Enterprise Holdings and Avis Budget Group trade at EV/EBITDA multiples of 6–8x, reflecting their stronger cash flows. Hertz's EV/EBITDA, if calculated using its $1 million EBITDA, would be astronomically high—over 1,800x—highlighting the market's skepticism about its path to profitability.

Yet this skepticism may be misplaced. Hertz's operational improvements—particularly in DPU and utilization—suggest a durable competitive edge. Its ability to secure Model Year 2025 fleet pricing pre-tariff has insulated it from inflationary shocks, while its digital transformation (e.g., a 11-point rise in Net Promoter Score) has enhanced customer retention. These factors, combined with a $1.45 billion liquidity buffer, imply a stronger balance sheet than its valuation suggests.

Strategic Implications for Investors

Hertz's reentry into the market hinges on three key factors:
1. Sustained Fleet Efficiency: Maintaining DPU below $300 and utilization above 80% will be critical to achieving consistent EBITDA.
2. EV Adoption: The company's pivot to electric vehicles, supported by government incentives, could differentiate it in a market increasingly prioritizing sustainability.
3. Used Car Market Exposure: Hertz's retail sales success demonstrates untapped potential in monetizing its fleet, a strategy that could offset rental demand volatility.

For investors, Hertz presents a high-risk, high-reward proposition. While its current valuation appears undervalued relative to operational improvements, the path to profitability remains uncertain. Risks include supply chain disruptions, residual value volatility for used cars, and regulatory shifts. However, in a post-pandemic environment where travel demand is resilient and inflation-adjusted pricing power is emerging, Hertz's strategic agility could unlock significant upside.

Conclusion: A Calculated Bet on Resilience

Hertz's journey from bankruptcy to EBITDA positivity is a testament to its operational rigor and adaptability. While its valuation metrics remain unorthodox, the company's focus on fleet optimization, cost discipline, and customer experience positions it to outperform in a fragmented market. For risk-tolerant investors, Hertz offers an opportunity to capitalize on its long-term repositioning—provided they can stomach near-term volatility. In a world where mobility is evolving faster than ever, Hertz's ability to reinvent itself may yet prove to be its greatest asset.