A month has gone by since the last earnings report for Ryder (R). Shares have lost about 4.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ryder due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ryder's Q4 Earnings & Revenues Beat
Ryder’s fourth-quarter earnings (excluding 24 cents from non-recurring items) of $1.82 per share surpassed the Zacks Consensus Estimate by a penny. The bottom line also increased 32.8% year over year on lower tax rate (courtesy of the Tax Reform) and better operating performance.
Total revenues came in at $2,2258.3 million, above the Zacks Consensus Estimate of $2,171.7 million. The top line also improved significantly year over year with growth across all segments. As the company is investing significantly on its lease and rental fleets, capital expenditures (net) soared 86.7% year over year to $2.8 billion during 2018. Operating cash flow totaled $1.64 billion in 2018, up 5.8%.
Segmental Results
Fleet Management Solutions (FMS): Total revenues amounted to $1.38 billion, up 11% year over year. Operating revenues (excluding fuel) summed $1.17 billion, up 10% year over year. Increase of 19% and 8%, each in commercial rental and ChoiceLease revenues, drove this segmental performance.
Dedicated Transportation Solutions (DTS): Total revenues summed $363.1 million, up 28% from the year-ago quarter. Operating revenues (excluding fuel and subcontracted transportation) rose 18% to $233.1 million on the back of volume growth among other factors.
Supply Chain Solutions (SCS): Total revenues were $670.4 million, up 26% year over year. Operating revenues (excluding fuel and subcontracted transportation) improved 19% year over year to $489.6 million. Segmental results were boosted by volume growth and the acquisition of MXD Group, completed in April last year.
Liquidity
The company exited the fourth quarter with cash and cash equivalents of $68.1 million compared with $78.3 million at the end of 2017. The company had total debt of $6,623.6 million compared with $5,409.7 million at 2017 end.
Q1 & 2019 Outlook
For 2019, the company anticipates adjusted earnings per share (excluding new lease accounting standard) of $6.20-$6.50, compared with $5.79 achieved in 2018. Ryder forecasts earnings per share (excluding new lease accounting standard) of $0.94-$1.01 in the first quarter. The year-ago figure stands at 91 cents.
Capital expenditures are expected to remain high this year as well due to higher investments on Ryder’s lease fleet. As a result, free cash flow is estimated to be at negative $1.1 billion in the year. Further, total revenues are envisioned to rise around 8% to $9 billion in the current year. Meanwhile, operating revenues are predicted to increase 9% to $7 billion in 2019.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
VGM Scores
At this time, Ryder has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Ryder has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Ryder System, Inc. (NYSE:R): Free Stock Analysis Report
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