Are We There Yet, Zipcar?

It may not be putting the pedal to the metal, but at least Zipcar (NAS: ZIP) keeps moving in the right direction.

The country's leading car-sharing service posted another healthy quarterly report last night. Revenue climbed 24% to $68.1 million, in line with Wall Street's expectations. Zipcar membership topped 650,000 drivers, 25% higher than it was a year earlier. Zipcar managed to post a profit of $0.02 a share, ahead of the small deficit that analysts were targeting. Adjusted EBITDA climbed 59% to $4.6 million.

The fundamentals also continue to improve. Revenue generated per car in its fleet clocked in at $65 a day, 8% ahead of where it was a year ago. It continues to be a BMOC -- Big Motor on Campus -- adding a presence in 36 new colleges and universities to top more than 250 schools.

There are no signs of auto-sharing being a passing lane fad. Its four original markets -- with Boston, San Francisco, New York, and Washington D.C. accounting for 58% of revenue -- grew revenue at a 23% clip. Pre-tax profit margins did narrow slightly in those established markets, partly as a result of Hurricane Irene's disruptive ways.

Zipcar's guidance is calling for sequential dips. The undisputed niche leader is targeting revenue of $62 million to $64 million, and $4 million to $5 million in adjusted EBITDA. Zipcar sees its bottom line coming in between a loss of $0.5 million and a profit of $0.5 million.

Don't panic. This is a seasonal business. Sequential dips heading into the chilly late fall and early winter months are historically consistent. Analyst estimates are pegged at breakeven results on $63.9 million in revenue.

There's clearly an opportunity here. Enterprise and Hertz (NYS: HTZ) have smaller auto-sharing initiatives, and fellow rental agencies Avis Budget (NAS: CAR) and Dollar Thrifty (NYS: DTG) can't afford to ignore this growing niche for too much longer.

There are also companies pioneering peer-to-peer models where drivers get paid to loan out their cars when they're sitting idle in the driveway. It's an iffy proposition, but leader RelayRides got a major boost when General Motors (NYS: GM) announced that OnStar cars can now be added seamlessly to RelayRides' inventory.

These are interesting times, as the high costs of auto ownership and urbanization trends continue to play into the car-sharing movement. Zipcar's is for real -- and it's driving right at you.

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At the time thisarticle was published The Motley Fool owns shares of Zipcar and Hertz Global Holdings. Motley Fool newsletter services have recommended buying shares of Zipcar and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Zipcar. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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