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Can Ryder System (R) Pull a Surprise this Earnings Season?
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Ryder System (R - Free Report) is scheduled to report second-quarter 2016 results on Jul 27, before market opens. Last quarter, the company posted a positive earnings surprise of 6.67%, buoyed by impressive sales. In fact, this was the third earnings beat for the company in the last four quarters, the average beat being 1.14%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Since the Fleet Management Solutions division accounts for the bulk of the revenues at Ryder System, the segment’s below-par performance will hamper the company’s second-quarter results significantly. In fact, the company issued a disappointing guidance for the second quarter wherein adjusted earnings per share are projected in the band of $1.50 to $1.55, below $1.65 per share recorded in the second quarter of 2015. Below par sales of rental and used vehicles led to the dull forecast.
Furthermore, we expect quarterly results to be impacted by unfavorable foreign currency movements. Moreover, we are concerned about the company’s weak balance sheet. The company exited the first quarter of 2016 with over $5.6 billion of debt compared with $5.5 billion at the end of 2015. Cash and cash equivalents were a mere $56.8 million at the end of the first quarter.
We are, however, impressed by the company's efforts to reward shareholders through dividend payments. Recently, the company hiked its quarterly dividend payout by 7.3% to 44 cents per share. We expect the company to provide additional updates on its shareholder friendly activities during the second-quarter conference call.
Earnings Whispers
Our proven model does not conclusively show that Ryder System is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Ryder System has an earnings ESP of 0.00%.That is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of $1.54 per share.
Zacks Rank: Ryder System has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, this alone is not sufficient to secure an earnings beat.
As a caution, we advise investors against considering stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Here are some transportation companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat in the upcoming quarter:
United Parcel Service (UPS - Free Report) has an earnings ESP of +1.40% and a Zacks Rank #3. The company will report second-quarter results on Jul 29.
Expeditors International of Washington (EXPD - Free Report) with an earnings ESP of +3.45% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Aug 2.
American Railcar Industries, Inc. has a Zacks Rank #3 and an earnings ESP of +2.02%. The company is scheduled to report second-quarter earnings on Jul 28.
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Can Ryder System (R) Pull a Surprise this Earnings Season?
Ryder System (R - Free Report) is scheduled to report second-quarter 2016 results on Jul 27, before market opens. Last quarter, the company posted a positive earnings surprise of 6.67%, buoyed by impressive sales. In fact, this was the third earnings beat for the company in the last four quarters, the average beat being 1.14%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Since the Fleet Management Solutions division accounts for the bulk of the revenues at Ryder System, the segment’s below-par performance will hamper the company’s second-quarter results significantly. In fact, the company issued a disappointing guidance for the second quarter wherein adjusted earnings per share are projected in the band of $1.50 to $1.55, below $1.65 per share recorded in the second quarter of 2015. Below par sales of rental and used vehicles led to the dull forecast.
Furthermore, we expect quarterly results to be impacted by unfavorable foreign currency movements. Moreover, we are concerned about the company’s weak balance sheet. The company exited the first quarter of 2016 with over $5.6 billion of debt compared with $5.5 billion at the end of 2015. Cash and cash equivalents were a mere $56.8 million at the end of the first quarter.
We are, however, impressed by the company's efforts to reward shareholders through dividend payments. Recently, the company hiked its quarterly dividend payout by 7.3% to 44 cents per share. We expect the company to provide additional updates on its shareholder friendly activities during the second-quarter conference call.
Earnings Whispers
Our proven model does not conclusively show that Ryder System is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Ryder System has an earnings ESP of 0.00%.That is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of $1.54 per share.
Zacks Rank: Ryder System has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, this alone is not sufficient to secure an earnings beat.
As a caution, we advise investors against considering stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
RYDER SYS Price and EPS Surprise
RYDER SYS Price and EPS Surprise | RYDER SYS Quote
Stocks to Consider
Here are some transportation companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat in the upcoming quarter:
United Parcel Service (UPS - Free Report) has an earnings ESP of +1.40% and a Zacks Rank #3. The company will report second-quarter results on Jul 29.
Expeditors International of Washington (EXPD - Free Report) with an earnings ESP of +3.45% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Aug 2.
American Railcar Industries, Inc. has a Zacks Rank #3 and an earnings ESP of +2.02%. The company is scheduled to report second-quarter earnings on Jul 28.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>