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Ryder System (R) Q3 Earnings Top, Stock Falls on Weak View

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Ryder System Inc. (R - Free Report) reported better-than-expected earnings and revenues in the third quarter of 2016. The transportation company’s adjusted earnings per share of $1.67 beat the Zacks Consensus Estimate of $1.65. However, the bottom line declined 4% year over year.

Ryder System reported revenues of $1,724 million that surpassed the Zacks Consensus Estimate of $1,701 million. The top line also improved over 3% on a year-over-year basis.  We note that Ryder System is not the only transportation company to report better-than-expected quarterly results. Sector participants like American Airlines Group (AAL - Free Report) and United Continental Holdings (UAL - Free Report) have also outperformed in the third quarter.

Segment Results

Fleet Management Solutions: Total revenue was flat at $1.16 billion in the third quarter. Operating revenues (revenues excluding fuel) inched up 1% year over year to $998 million.

Supply Chain Solutions: Total revenue came in at $417 million, up 8% from the year-ago quarter. Operating revenues (excluding fuel and subcontracted transportation) grew 8% year over year to $345 million.

Dedicated Transportation Solutions: Total revenue in the quarter under review was $261 million, up 15% year over year. Operating revenues (revenue excluding fuel and subcontracted transportation) increased 7% year over year to $197 million.

RYDER SYS Price, Consensus and EPS Surprise

 

RYDER SYS Price, Consensus and EPS Surprise | RYDER SYS Quote

Liquidity & Capital Expenditure

Ryder System exited the third quarter with cash and cash equivalents of $75 million compared with $60.9 million at year-end 2015. The company had total debt of $5,519.6 million as against $5,502.6 million at the end of 2015.

The company generated operating cash of $1.18 billion in the first nine months of 2016, up 11% year from $1.07 billion in 2015. The company maintains operating cash flow projection at $1.6 billion for 2016. Free cash flow is still expected at $200 million for the year.

Guidance

The company now expects 2016 adjusted earnings in the band of $5.70–$5.85 per share as against $5.90–$6.05 per share expected earlier. The Zacks Consensus Estimate for 2016 is pegged at $5.95 per share. The company expects fourth-quarter adjusted earnings per share in the band of $1.35–$1.50. The Zacks Consensus Estimate for the fourth quarter stands at $1.61 per share.

The dismal guidance resulted in share price decline in early trading despite the earnings beat.

Zacks Rank & a Stock to Consider

Ryder System currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the transportation space is Copa Holdings (CPA - Free Report) , which sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

For 2016, the  Zacks Consensus Estimate for Copa Holdings has climbed 12 cents to $4.57 per share over the last two months.


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