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Ryder System, Inc. (R - Free Report) is struggling with challenging conditions in its used equipment division. This Zacks Rank #5 (Strong Sell) guided 2017 below consensus.
Ryder operates in commercial fleet management and supply chain solutions.
It operates in 3 segments: Fleet Management Solutions, Dedicated Transportation Solutions and Supply Chain Solutions. This includes leasing and fueling commercial rental and used vehicle sales.
A Rare Miss in the Fourth Quarter
On Feb 2, Ryder reported its fourth quarter 2016 results and reported a rare miss on the Zacks Consensus Estimate.
Earnings were just $1.07 compared to the Zacks Consensus of $1.40. That's a miss of 33 cents, or 23%.
Revenue still grew by 3% to a record $1.7 billion. For the full year, revenue jumped 3% to a record $6.8 billion.
The miss was a result of challenging conditions in the used vehicle market which continued throughout the quarter. In fact, Ryder now anticipates that the conditions will persist over the next 18 months, which is longer than previously believed.
2017 Guidance Below Consensus
Given the weakness in the used vehicle market, the company gave 2017 full year guidance in the range of $5.10 to $5.40, which was under the Zacks Consensus.
It's not surprising, then, that the analysts all lowered their estimates to get in line with the guidance.
The 2017 Zacks Consensus Estimate fell to $5.20 from $5.95. That's an earnings decline of 4% from 2016 as the company earned $5.42 in 2016.
Analysts also see 2018 as weaker. The 2018 Zacks Consensus was cut to $5.77 from $6.48.
Shares Off the Lows
Ryder shares were really hit last year and then recovered off their lows.
Surprisingly, the recent miss and guide lower didn't hit the shares that much.
Ryder is actually cheap, with a forward P/E of 13.9. It also pays a dividend, currently yielding 2.3%.
If the earnings estimates turn around, value investors will probably be interested again.
In the meantime, investors might want to consider one of the rental tool companies like United Rentals (URI - Free Report) or H&E Equipment Services (HEES - Free Report) . They aren't facing the same challenges in their rental markets.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Bear of the Day: Ryder (R)
Ryder System, Inc. (R - Free Report) is struggling with challenging conditions in its used equipment division. This Zacks Rank #5 (Strong Sell) guided 2017 below consensus.
Ryder operates in commercial fleet management and supply chain solutions.
It operates in 3 segments: Fleet Management Solutions, Dedicated Transportation Solutions and Supply Chain Solutions. This includes leasing and fueling commercial rental and used vehicle sales.
A Rare Miss in the Fourth Quarter
On Feb 2, Ryder reported its fourth quarter 2016 results and reported a rare miss on the Zacks Consensus Estimate.
Earnings were just $1.07 compared to the Zacks Consensus of $1.40. That's a miss of 33 cents, or 23%.
Revenue still grew by 3% to a record $1.7 billion. For the full year, revenue jumped 3% to a record $6.8 billion.
The miss was a result of challenging conditions in the used vehicle market which continued throughout the quarter. In fact, Ryder now anticipates that the conditions will persist over the next 18 months, which is longer than previously believed.
2017 Guidance Below Consensus
Given the weakness in the used vehicle market, the company gave 2017 full year guidance in the range of $5.10 to $5.40, which was under the Zacks Consensus.
It's not surprising, then, that the analysts all lowered their estimates to get in line with the guidance.
The 2017 Zacks Consensus Estimate fell to $5.20 from $5.95. That's an earnings decline of 4% from 2016 as the company earned $5.42 in 2016.
Analysts also see 2018 as weaker. The 2018 Zacks Consensus was cut to $5.77 from $6.48.
Shares Off the Lows
Ryder shares were really hit last year and then recovered off their lows.
Surprisingly, the recent miss and guide lower didn't hit the shares that much.
Ryder is actually cheap, with a forward P/E of 13.9. It also pays a dividend, currently yielding 2.3%.
If the earnings estimates turn around, value investors will probably be interested again.
In the meantime, investors might want to consider one of the rental tool companies like United Rentals (URI - Free Report) or H&E Equipment Services (HEES - Free Report) . They aren't facing the same challenges in their rental markets.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>