Ryder System, Inc.

Some of the transportation companies are still seeing double digit earnings growth. Ryder System, Inc. (R - Analyst Report) raised full year guidance in October, despite the uncertain economic environment. This Zacks #1 Rank (Strong Buy) is a value stock with a forward P/E of 13.4.

Ryder offers commercial transportation, logistics and supply chain management solutions to global customers.

The company has 3 segments: Fleet Management Solutions, which offers acquisition, financing and maintenance of vehicles, Supply Chain Solutions, which arranges logistic services and Dedicated Contract Carriage which provides customers with vehicles, drivers and administrative support including routing and scheduling.

Ryder Beat for the 7th Time in a Row

On Oct 25, Ryder reported its third quarter results and surprised on the Zacks Consensus Estimate by 6.9%. It was the 7th consecutive earnings beat. Earnings per share were $1.09 compared with the consensus of $1.02. It made just 76 cents in the year ago quarter.

Revenue jumped 19% to $1.6 billion from $1.3 billion in the third quarter of 2010. Revenue was up in all three of the company's segments.

Fleet Management Solutions saw a 15% jump. It saw continuing strong demand and higher pricing for its commercial rental and used vehicle offerings.

Supply Chain Solutions grew 26%, but it was largely due to the impact of an acquisition. Dedicated Contract Carriage (DCC) saw revenue rise 31% reflecting an acquisition and the pass through of higher fuel costs.

Raised 2011 Guidance Again

Ryder has been consistently outperforming even its own guidance. It had been more conservative given the not-so-great general economic environment and GDP trends.

But, at the end of October, the company yet again raised its full year guidance to a range of $3.44 to $3.49 from the prior range of $3.33 to $3.43.

Zacks Consensus Estimates Rise

Analysts are bullish about 2011. The Zacks Consensus Estimate has risen by 6 cents to $3.49 in the last 90 days. That is at the high end of the company's guidance range.

It is also earnings growth of 57.1% compared to the $2.22 it made in 2010.

Even with the economic uncertainty, double digit growth is also expected in 2012. The 2012 Zacks Consensus Estimate has risen to $4.09 from $4.08 in the last 3 months. One estimate has actually moved higher in just the last week.

That is further earnings growth of 17.2%.

Valuations Still Attractive

Shares plunged over the summer, in the general market sell off.

While they have generally rebounded, Ryder still has cheap valuations.

In addition to a P/E under 15, which is what I use as a cut-off for value stocks, Ryder also has a price-to-book of 1.9. A P/B under 3.0 usually indicates "value."

It also has a price-to-sales ratio of 0.5. A P/S ratio under 1.0 can mean a company is undervalued.

In addition to solid valuations, Ryder also rewards investors with both a share repurchase program and a dividend, currently yielding 2.1%.

Ryder is scheduled to report fourth quarter results on Feb 2. Investors should stay tuned to see if Ryder can continue to defy the greater economic trends and post double digit earnings growth.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.

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