Ryder Opens New Sales Center

Ryder System Inc. (R - Analyst Report) – one of the world's largest providers of integrated logistics and transportation solutions – is set to launch its first used vehicle center ‘Ryder Vehicle Sales’ center in Surrey, British Columbia.

The new Vehicle Sales center will facilitate selling of used commercial and heavy-duty vehicles, which includes – trucks, trailers, tractors, straight trucks, panel and cube vans, refrigerated trucks and stake trucks. These used vehicles will be sold to customers along with a Ryder Road Ready(TM) certificate and a 30-day warranty period. Moreover, the customers will get access to complete maintenance history of that vehicle before its purchase.

Few days back, Ryder inked a deal with Multi Group Logistics, Inc., an Illinois-based truckload service provider to offer onsite maintenance for a fleet of 500 trucks and 675 trailers and a full service lease for 205 tractors.

We believe Ryder’s persistent wins of such contracts, coupled with favorable lease rate environment, will deliver strong result for the company going forward. Moreover, strategic acquisitions and increased investments in vehicles provide long-term growth potential for Ryder.

However, we remain concerned about the challenging economic environment surrounding the company’s operations despite its strong performance. Further, heavy capital expenditures, a distressed cash position, lower demand on tighter truckload market and stiff competition from peers like Con-Way Inc. (CNW - Snapshot Report) could limit the long-term growth for the company. We, thus maintain our long-term Neutral rating on Ryder.

Currently, Ryder has a Zacks #3 Rank, implying a short-term Hold rating on the stock.