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Ryder (R) Up 0.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Ryder (R - Free Report) . Shares have added about 0.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ryder due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ryder Beats Q1 Earnings Estimates

Ryder delivered first-quarter 2021 earnings (excluding 13 cents from non-recurring items) of $1.09 per share, surpassing the Zacks Consensus Estimate of 58 cents. In the year-ago period, the company incurred a loss of $1.38.

Total revenues of $2,221.6 million beat the Zacks Consensus Estimate of $2,148.1 million. The top line inched up approximately 3% year over year due to higher supply chain and rental revenues.

Segmental Results

Fleet Management Solutions (“FMS”): Total revenues in the segment amounted to $1,335 million, flat year over year. Operating revenues (excluding fuel and lease liability insurance revenues) summed $1,168 million, up 1% year over year. Segmental results benefited from higher rental pricing amid lower SelectCare and other revenues. While commercial rental revenues increased 8% from the year-ago period, fuel services revenues fell 4%. ChoiceLease revenues inched up 1% year over year.

Dedicated Transportation Solutions (“DTS”): Total revenues amounted to $320.5 million, down 4% from the year-ago quarter’s figure. The decline in DTS’ total revenues was primarily caused by lower subcontracted transportation. Operating revenues (excluding fuel and subcontracted transportation) were flat year over year at $237 million.

Supply Chain Solutions (“SCS”): Total revenues in the segment were $707 million, up 12% year over year. Operating revenues (excluding fuel and subcontracted transportation) rose 8% year over year to $503 million. Segmental results were driven by new business and higher volumes.

Other Details

Ryder exited the first quarter with cash and cash equivalents of $91.7 million compared with $151.3 million at the end of 2020. The company’s total debt (including current portion) fell to $6,372.2 million at the end of the first quarter from $6,610.2 million at the end of 2020.

Gross capital expenditures increased to $407 million in the first quarter of 2021 compared with $392 million in the year-ago period due to higher investments on rental fleet. Free cash flow in the period was $241 million, higher than $111 million in the year-ago period. The increase was due to lower cash capital expenditures.

2021 Earnings View Increased

Ryder now anticipates adjusted earnings per share to be $5.50-$5.90 in 2021, better than the previously guided range of $4.15-$4.65. Free cash flow is estimated to be between $400 million and $700 million in the year. Capital expenditures are predicted to be in the range of $2 billion-2.3 billion.
 
For the second quarter of 2021, the company estimates adjusted earnings of $1.25-$1.35 per share.

Thanks to the improving freight environment, the company anticipates the FMS segment to perform well, driven by lease, rental and used vehicle sales. It expects strong pricing in rental and used vehicle sales to continue.

However, Ryder expects its supply chain earnings to be negatively impacted by semiconductor shortage.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 28.51% due to these changes.

VGM Scores

Currently, Ryder has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ryder has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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