Is Enterprise Rent-A-Car A Fortune 500 Company?

Enterprise Rent-a-Car was founded in 1957 by Jack Taylor, who passed away in 2016, and is the nation’s largest rental company of vehicles for personal and business use.

Enterprise Holdings is the umbrella for Enterprise, National, and Alamo rental brands. Combining neighborhood locations and airports, Enterprise has over 10,000 locations in the United States.

In addition to rental cars, Enterprise also offers truck rentals for personal and business use, corporate fleet management, car sales, and car sharing. Jack Taylor’s family still owns Enterprise Holdings.

Is Enterprise Rent-A-Car Publicly Traded?

Enterprise Holdings is privately held, meaning company stock isn’t sold and isn’t listed on any stock exchange. The company continues to be owned by the descendants of the founder and it doesn’t appear likely they’ll ever make the move to publicly trading shares of Enterprise.

In fact, Enterprise Holdings employs more than 100,000 employees across the US and operates in 85 countries – even employees cannot purchase Enterprise shares. Unless the family decides sometime in the future to publicly sell Enterprise shares, you cannot purchase stock in the company.

So, if you want to own stocks in a rental car company, you might be curious about your options.

While you can’t buy Enterprise shares, there are other car rental and retail sales shares that you can invest in. For instance, Hertz Global appears to be one of this industry’s best alternatives – at least you may have thought so up until recently.

After all, Hertz had been in the car rental business since 1918 – with over a century of experience; it seemed like a no-brainer.

But Hertz’ balance sheet is loaded with debt and not much fluidity. Given the strange times we’re experiencing, who knows – Hertz could end up becoming a part of the Enterprise Holdings umbrella.

As of right now, Hertz Global’s umbrella covers three main car rental companies that basically provide the same services as Enterprise – both personal and commercial vehicle rental and sales.

Aside from Hertz car rental, Hertz Global also oversees Dollar Rent-a-Car and Thrift Car Rentals.

Overall, Hertz Global has over 10,200 world locations and employs just under 40,000 employees. And behind Enterprise, Hertz global is the next-to-largest car rental company in the world operating in 150 countries on five continents.

How Does Enterprise Rent-A-Car Make Money?

You’d be forgiven if you thought that Enterprise makes money solely from the rental of cars. But the reality is that Enterprise Holdings operates across four different units:

  • Enterprise Rent-A-Car
  • Enterprise Fleet Services
  • Enterprise Car Sales
  • Enterprise Rent-A-Truck

But how do they actually turn profit and make money?

Vehicle rental operations can buy cars directly from manufacturers – this is known as fleet sales. By cutting out the middlemen, car rental companies receive a volume – or bulk buying – discount.

Because they purchase at such deep discounts, a rental car company can use the vehicles as rental cars for a year or so and then sell them as virtually new cars and for right around the same amount they paid originally.

In a sense, especially because the company makes money off the vehicle for the entire year of rental, places like Enterprise get their cars virtually for free.

It is the rental fees that make up the profits for rental car companies.

Enterprise Holdings’ Other Services

Let’s take a look at the other Enterprise operations.

Enterprise Fleet Services

As the other companies under the Enterprise Holdings umbrella, this, too, is a privately held venture.

Open to governmental agencies, companies, and other organizations with a need for at least 20 vehicles, Enterprise Fleet Services provides fleet management services.

It’s also perfect for companies that would rather provide employees with company vehicles rather than provide programs for employee reimbursement.

Enterprise Car Sales

Because this is under the Enterprise umbrella, many of the vehicles sold by Enterprise Car Sales are from rental fleets throughout their locations.

This means these are newer model vehicles that have received meticulous care, inside and out.

Buyers get added peace of mind knowing the rigorous inspection process these vehicles must pass prior to be offered for sale – meaning they’ll get a car they love that’ll last for many more years at a fraction of the cost of a dealership.

Enterprise Rent-A-Truck

Need a commercial vehicle for personal or company use? Enterprise Rent-A-Truck has 350 locations nationwide, across Canada, and in Puerto Rico.

Who is the Biggest Rental Car Company?

Enterprise Rent-A-Car is far and away the United States’ largest company providing car rental services.

With over 10,000 locations, 419 of which are located at major airports, Enterprise has the bulk of the market share among car rental agencies.

Its closest competitor, Hertz, is facing bankruptcy – which means Enterprise likely will gain an even bigger share of the market.

On May 22, 2020, Hertz declared Chapter 11 bankruptcy – another victim of this heart wrenching year. But the filing didn’t come as a surprise to those following the recent wave of crumbling business.

With the halting of business trips and travel in general, this car rental company suddenly had an enormous amount of assets sitting unused. And it wasn’t only that their number one profit fountain was shut off – the used car market suddenly went into freefall, further devaluing their entire fleet.

In an effort to erase at least a portion of their current debt, Hertz announced it’d be selling its shares to the tune of around $1 billion, catering to traders who love short-term speculation.

Yep. Hertz, who’s fighting the NYSE to remain listed, is selling stock that could soon be totally without value. But that’s not stopping retail investors from jumping on the Hertz wagon.

On June 12, 2020, shares of Hertz closed at $2.83, jumping over 37% from June 11’s closing. In fact, since Hertz’ historical $0.56 per share close on May 26, share prices have risen over 400%.

Enterprise vs Hertz – What Enterprise Does Differently

It’s pretty obvious which of these two companies is more fiscally responsible – even if Enterprise, as a privately held company, doesn’t disclose its net income.

Reported revenue from Enterprise Holdings topped $25.9 billion for Fiscal Year 2019. FY 2018 saw Enterprise revenues of $24.1 billion, which is a 7.5% increase year-over-year. Its fleet size globally hovers around 2 million cars and trucks, and from 2018 to 2019, they added five countries to their roster.

Hertz’ fiscal responsibility, or lack thereof, has led them to their recent bankruptcy filing.

Rental companies like Hertz and Enterprise depend on around 67% of their annual revenue from their airport locations, which lends more credence to Enterprise Holdings financial responsibility – April and May saw a 94% decline in airline travel. Fewer people renting cars at airport locations is a good chunk of revenue gone.

A good percentage of non-airport transactions originate from people whose personal vehicles have been damaged in an accident – with more and more people staying home, driving is also down, meaning accidents aren’t occurring as often.

With these two leading revenue sources eliminated, the fact that Enterprise is still holding their own highlights how well they run this family-owned business.

Will Enterprise Rent-A-Car Ever Be a Fortune 500 Company?

It’s almost certain that, no, Enterprise won’t be a Fortune 500 company. If it were to become one, given its current standing in the car rental and sales markets, it’s highly likely that Enterprise would be in the top 100 of Fortune 500 companies and that its stock would most definitely be a ‘buy’ right now.

But Jack Taylor’s brainchild is a privately held company and it’s likely to remain so. If you had your heart set on purchasing Enterprise stocks, you can still join in the car rental stock-trading game by investing in a competitor, such as Avis or Budget, both of which are publicly traded companies.

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