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Ryder (R) Shares Gain Altitude in Friday's Trading: Here's Why

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Shares of Ryder System (R - Free Report) performed well on the bourses in Friday’s (Jun 3, 2022) trading, closing the day at $81.60, up 1.44% from Thursday’s (Jun 2, 2022) closing price. The upside was attributable to management’s raised earnings per share guidance for the June quarter as well as for the full year, ahead of its Investor Day, also held on Friday.

For the second quarter of 2022, Ryder now expects earnings per share (on an adjusted basis) in the $3.90-$4.15 band (earlier view was in the $3.50-$3.75 range). The Zacks Consensus Estimate is currently pegged at $3.74. Favorable pricing in addition to strong rental and used vehicle sales compelled management to hike guidance.

Per Robert Sanchez, chairman and chief executive officer for Ryder. “Our increased outlook reflects earlier-than-expected realization of benefits from pricing initiatives in all business segments and strong rental and used vehicle sales performance in the second quarter.”

Ushering in more good news, Ryder also lifted its forecast for 2022 key metrics. Owing to the bullish environment, as highlighted above, R anticipates current-year adjusted earnings in the $13.40-$14.40 band compared with the $13.00-$14.00 range forecast while releasing first-quarter 2022 results in April.

The midpoint of the newly guided range (i.e $13.90) is below the Zacks Consensus Estimate of $13.99. Ryder had reported earnings (excluding the impact of non-recurring items) of $9.58 per share in 2021.

Ryder, currently sporting a Zacks Rank #1 (Strong Buy), also upped its outlook for the current-year adjusted ROE to 24-26% from the earlier estimate of 23-25%. The current-year operating revenues are still expected to increase approximately 14% from the 2021 actuals. Free cash flow is still anticipated in the $550-$650 million range for 2022.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, during the Investor Day, management highlighted a balanced growth strategy to drive its shareholder returns. Also, a robust freight environment is likely to drive results going forward.

Other Key Picks

Investors interested in the Zacks Transportation sector may also consider stocks like C.H. Robinson Worldwide (CHRW - Free Report) and Southwest Airlines (LUV - Free Report) , presently flaunting a Zacks Rank of 1.

The long-term (three-to-five years) expected earnings per share growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW. In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and remarkable profits in ocean freight.

C.H.Robinson's bottom line outshined the Zacks Consensus Estimate in three of the last four quarters (missing the consensus mark in the remaining quarter). Driven by the positives, the stock has rallied 9.6% in the past year.

Southwest Airlines: Continued recovery in air-travel demand bodes well for LUV. Anticipating a steady improvement in bookings, the carrier expects to reap profits in the remaining three quarters of 2022 as well as for the full year. LUV's management predicts operating revenues to increase 12-15% in the second quarter of 2022 from the comparable period’s level in 2019. LUV is seeing strong bookings for the spring and summer travel season. 

The positivity surrounding the Southwest Airlines stock is evident from the Zacks Consensus Estimate for current-year earnings being revised in excess of 100% upward over the past 60 days. LUV has a Growth Style Score of B.

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