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Here's Why You Should Retain Ryder System (R) Stock Now
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Ryder System, Inc. (R - Free Report) is being aided by buoyant air-travel demand and shareholder-friendly measures. However, low liquidity is worrisome.
Factors Favoring R
Despite weak freight conditions, Ryder System reported better-than-expected revenues in first-quarter 2023. The top line also increased year over year. Revenues at the SCS and DTS segments improved 10% and 7%, respectively.
Ryder System’s measures to reward its shareholders through dividends and share buybacks are appreciative. In July 2021, the company announced a 3.6% hike in its quarterly dividend to 58 cents per share. In July 2022, it announced a further 7% hike in its quarterly dividend, taking the total to 62 cents (annualized $2.48).
The company is also active on the buyback front. On Oct 27, 2021, its board of directors authorized two new share repurchase programs. Under that plan, management is authorized to repurchase up to 2 million shares of common stock at its discretion from Oct 14, 2021 through Oct 14, 2023.
In February 2022, the company entered into a $300 million accelerated share buyback program. In fourth-quarter 2022, Ryder System repurchased 2 million shares for $179 million under its completed 2021 Discretionary program.
Additionally, Ryder System repurchased 0.9 million shares for $78 million under its 2021 Anti-Dilutive program. In February 2023, Ryder System’s board approved a new 2 million share discretionary repurchase program. Management is now authorized to buy back up to 2 million shares of common stock at its discretion from Feb 10, 2023 through Feb 10, 2025 (two years).
Key Risks
Ryder System’s weak liquidity position is concerning. At the end of first-quarter 2023, R’s cash and cash equivalents were $253 million, much lower than the current debt of $1,674 million. This implies that the company does not have sufficient cash to meet its current debt obligations.
Zacks Rank & Key Picks
Currently, R carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Allegiant, currently sporting a Zacks Rank #1, also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to rise 366% and 192%, respectively, on a year-over-year basis.
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Here's Why You Should Retain Ryder System (R) Stock Now
Ryder System, Inc. (R - Free Report) is being aided by buoyant air-travel demand and shareholder-friendly measures. However, low liquidity is worrisome.
Factors Favoring R
Despite weak freight conditions, Ryder System reported better-than-expected revenues in first-quarter 2023. The top line also increased year over year. Revenues at the SCS and DTS segments improved 10% and 7%, respectively.
Ryder System’s measures to reward its shareholders through dividends and share buybacks are appreciative. In July 2021, the company announced a 3.6% hike in its quarterly dividend to 58 cents per share. In July 2022, it announced a further 7% hike in its quarterly dividend, taking the total to 62 cents (annualized $2.48).
The company is also active on the buyback front. On Oct 27, 2021, its board of directors authorized two new share repurchase programs. Under that plan, management is authorized to repurchase up to 2 million shares of common stock at its discretion from Oct 14, 2021 through Oct 14, 2023.
In February 2022, the company entered into a $300 million accelerated share buyback program. In fourth-quarter 2022, Ryder System repurchased 2 million shares for $179 million under its completed 2021 Discretionary program.
Additionally, Ryder System repurchased 0.9 million shares for $78 million under its 2021 Anti-Dilutive program. In February 2023, Ryder System’s board approved a new 2 million share discretionary repurchase program. Management is now authorized to buy back up to 2 million shares of common stock at its discretion from Feb 10, 2023 through Feb 10, 2025 (two years).
Key Risks
Ryder System’s weak liquidity position is concerning. At the end of first-quarter 2023, R’s cash and cash equivalents were $253 million, much lower than the current debt of $1,674 million. This implies that the company does not have sufficient cash to meet its current debt obligations.
Zacks Rank & Key Picks
Currently, R carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
Copa Holdings, which presently sports a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Allegiant, currently sporting a Zacks Rank #1, also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to rise 366% and 192%, respectively, on a year-over-year basis.