Ryder System, Inc. (NYSE:R) has been struggling of late due to challenging market conditions. The company reported lower-than-expected earnings per share in the first quarter of 2017. Earnings also plunged 26.8% on a year-over-year basis. The weaker-than-expected rental demand hurt results.
The company trimmed its view for full-year 2017 and has issued a lackluster forecast for earnings in second quarter. The company expects second-quarter 2017 adjusted earnings per share in the band of 87-97 cents which is way below the second-quarter 2016 figure of $1.54 per share.
The company expects full-year 2017 guidance for adjusted earnings to vary between $4.25-$4.55 per share, lower than the previous range of $5.10-$5.40. Softness pertaining to commercial rental demand contributed to Ryder’s decision to minimize its 2017 earnings view.
The Zacks Consensus Estimate for 2017 has significantly shrunk to $4.35 per share since the earnings release. The demand for used vehicles is expected to remain low until mid-2018.
Bulk of the company’s revenues is drawn from the Fleet Management Solutions division. We believe the company’s rise is dependent on improving its lease fleet and commercial rental of truck. The segment’s below-par performance is hurting the stock and hampering the company’s growth prospects.
The company’s high debt levels also raise concerns. It exited the first quarter of 2017 with a debt-to-capitalization ratio of 72%, which is worrying. Ryder had cash and cash equivalents of $38.00 million at the end of first quarter, lower than $58.8 million in 2016-end.
Due to these headwinds, shares of the company have significantly underperformed the Zacks categorized Transportation - Equipment and Leasing industry in the last three months. The stock has lost 7.55% compared with the industry’s 4.17% increase.
In line with these negatives, we suggest investors to avoid this stock at the moment.
Zacks Rank & Key Picks
Ryder System currently carries a Zacks Rank #5 (Strong Sell). Some better ranked stocks worth considering in the transportation sector are CAI International, Inc. (NYSE:CAI) , Freightcar America, Inc. (NYSE:R) and Triton International Limited (NYSE:R) . All sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of CAI International, Freightcar America and Triton International rallied over 63%, 32% and 45% respectively, in the last three months.
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Ryder System, Inc. (R): Free Stock Analysis Report
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CAI International, Inc. (CAI): Free Stock Analysis Report
Triton International Limited (TRTN): Free Stock Analysis Report
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