Surely, the stock would get a boost after such an impressive quarter and upbeat outlook, right?  Not exactly, Dollar Thrifty also reported that the company would be raising capital through a secondary offering.  News of a rather large secondary offering has sent shares reeling, down more than 15% in afternoon trading.  According to the statement, DTG plans to offer 5.75 million shares to the public, a move that would represent an increase to shares outstanding of about 26%.  Clearly, the dilution to common shareholders makes this investment fundamentally less attractive.

A quarterly result that Dollar Thrifty investors had hoped would provide movement to the upside has been completely overshadowed by the secondary offering.  At Ockham, we are maintaining our Fairly Valued stance on DTG as of this week's report, but our analysis had not yet accounted the dilution the offering represents.  It is unclear that this will be sufficient to warrant a downgrade to Overvalued next week but it will make per share valuation metrics less favorable by 26%.  Considering this stock has strongly rebounded to above $20's after hovering around the $1 mark earlier this year, it would be difficult to refer to this as a value stock.  At this point, despite the stronger quarter and improving sales trends, we are not advising buying into this stock.