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Ryder (R) Down 12.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Ryder (R - Free Report) . Shares have lost about 12.3% 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 catalysts.

Ryder's Q1 Earnings & Revenues Surpass Estimates

The company’s adjusted earnings of $1.11 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line also improved on a year-over-year basis on revenue growth and a better operating performance.

Total revenues grossed $2,180 million, above the Zacks Consensus Estimate of $2,131 million. The top line also rose 15% year over year with growth across all segments. As the company is investing substantially in its lease and rental fleets, capital expenditures (net) soared 62.6% year over year to $1.01 billion during the first quarter of 2019. Operating cash flow was $485 million in the reported quarter, up 43.9%.

Segmental Results

Fleet Management Solutions: Total revenues amounted to $1.35 billion, up 9% year over year. Operating revenues (excluding fuel) summed $1.14 billion, up 10% year over year. Increase of 15% and 8%, each in commercial rental and ChoiceLease revenues, drove this segmental performance.

Dedicated Transportation Solutions: Total revenues came in at $349.6 million, up 17% from the year-ago quarter. Operating revenues (excluding fuel and subcontracted transportation) also rose 17% to $235.6 million on the back of volume growth, new businesses and customer expansions.

Supply Chain Solutions : Total revenues were $635.7 million, up 28% year over year. Operating revenues (excluding fuel and subcontracted transportation) improved 25% year over year to $477.1 million. Segmental results were boosted by volume growth, new businesses, higher pricing and the acquisition of MXD Group, completed last April.

Liquidity

The company exited the first quarter with cash and cash equivalents of $62.8 million compared with $68.1 million at the end of 2018. As of Mar 31, 2019, the company had total debt of $7.1 billion compared with $6.6 billion at 2018 end.

Q2 & 2019 Outlook

For the second quarter, Ryder estimates adjusted earnings of $1.34-$1.44 per share, lower than $1.46 reported in the year-ago period. Based on healthy demand conditions, the company has raised its full-year adjusted earnings forecast to $6.05-$6.35 per share from $6-$6.30, expected earlier. This compares with $5.97 per share reported in the prior year. While the current-year earnings guidance is encouraging, the company’s free cash flow projection is projected to be a negative of $1.1 billion in the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -8.08% due to these changes.

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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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