Localiza (RENT3.SA): 2Q’26 Preview: Good 2Q Despite Lower Seasonality; Increasing Caution on Car Market Risks

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Localiza (RENT3.SA): 2Q’26 Preview: Good 2Q Despite Lower Seasonality; Increasing Caution on Car Market Risks

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15 Jul 2026 21:02:32 ET │ 16 pages

Localiza (RENT3.SA)

2Q'26 Preview: Good 2Q Despite Lower Seasonality; Increasing Caution

on Car Market Risks

CITI'S TAKE Buy

Price (15 Jul 26 18:00) R$40.35 We expect good 2Q results, despite softer-than-1Q strength. Lower

Target price R$48.00↓ seasonality may have decelerated rental volumes and tariffs, while

margins should face mild pressure from tariffs and incremental marketing from R$54.00

expenses. We expect robust Seminovos volumes but with more modest Expected share price return 19.0%

margins, pressured by sales mix. Beyond 2Q estimates, we are Expected dividend yield 7.8%

meaningfully increasing depreciation and reducing Seminovos margin Expected total return 26.7%

forecasts for the upcoming years, as we incorporate additional caution Market Cap R$43,684M

about 2H26 used car prices and expect a slower (and possibly more

US$8,601M challenging) transition towards normalized depreciation (more details are

in the note). Since management sounds cautious, anchoring expectations

for the upcoming risks, and very focused on profitability, we remain

unfazed by rising depreciation that looks already priced by the market. We Filipe NielsenAC

remain Buyers of Localiza even over much lower earnings, with valuation +55-11-4009-5213

of 8.6x P/E 27E too low for such a high-value company (TP from R$54 to filipe.nielsen@citi.com

R$48/sh, see Figure 1), in our view.

Increasing caution with the car market... — Although our recent car pricing tracker

suggests a resilient pricing environment, supportive for Localiza's Seminovos

division, our recent interactions with the company and OEMs justify additional