A 'Stealth Company' No Longer

Management trainee Allynson Ford (center) helping a customer.

Takeoff. Altogether, home-city rentalsnow outpace those at airports industrywide. Hertz and Avis finally pushed into neighborhood branches about the same time Enterprise began invading their airport turf. Last year's purchase of Alamo and National tripled airport rentals to about 30 percent of Enterprise's total.

That's not seen by Wall Street as all good. After the merger, the company's debt rating was downgraded (though it remains at investment grade, unique in the business). "We view the airport side as riskier," says Standard & Poor's analyst Betsy Snyder. Airports are more competitive and cyclical, with thinner margins. And the slowing economy has reduced hopes that Enterprise might quickly strengthen its balance sheet and get a ratings boost, Snyder says.

Enterprise's Nicholson says, however, that the acquisition is key to the company's growth. Enterprise now can cover most categories of car renters, including Alamo's casual and National's business travelers, and compete better for large contracts, she says. "It helped us grow our corporate business."

The merger also diversified Enterprise. The company is building ventures in fleet leasing, truck rentals, and car-sharing for corporations and campuses, which recently went nationwide as "WeCar."

Enterprise, not incidentally, is the nation's largest seller of used cars (including some on its own retail lots). Most other rental companies make automakers repurchase their cars. Auto sales are risky. But they provide added opportunities for all those college graduates the company hires, says Nicholson, who herself started at a St. Louis branch in 1981. "We promote from within." And that helps motivate a level of customer service that can be, well, unusual.