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Why Is Ryder System (R) Up 7% Since the Last Earnings Report?

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It has been about a month since the last earnings report for Ryder System, Inc. (R - Free Report) . Shares have added about 7% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fourth-Quarter Earnings

Ryder System reported lower-than-expected earnings, but better-than-expected revenues in the fourth quarter of 2016. The company’s adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.40 per share. Earnings also declined on a year-over-year basis. The tough market for the used vehicles hurt results.

Ryder reported total revenues of $1,729 million, which beat the Zacks Consensus Estimate of $1,722.9 million. Revenues also increased 3.38% on a year-over-year basis.

Segment Results

Fleet Management Solutions: Total revenue was flat at $1.15 billion in the fourth quarter. Operating revenues (revenues excluding fuel) decreased 1% year over year to $992 million.

Dedicated Transportation Solutions: Total revenue came in at $257 million, up 11% from the year-ago quarter. Operating revenues (excluding fuel and subcontracted transportation) grew 3% year over year to $193.1million.

Supply Chain Solutions: Total revenue in the quarter under review was $430 million, up 10% year over year. Operating revenues (revenue excluding fuel and subcontracted transportation) increased 9% year over year to $197 million.

Liquidity

Ryder System exited the fourth quarter with cash and cash equivalents of $58.8 million compared with $60.9 million at year-end 2015. The company had total debt of $5,391.6 million as against $5,502.6 million at the end of 2015.

Guidance

The company expects 2017 adjusted earnings in the band of $5.10 to $5.40 per share, while the Zacks Consensus Estimate is pegged at $5.76 per share. Moreover, the company expects first quarter 2017 adjusted earnings per share in the band of $0.82 to $0.92.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter. In the past month, the consensus estimate has shifted lower by 21.78% due to these changes.

Ryder System, Inc. Price and Consensus

 

Ryder System, Inc. Price and Consensus | Ryder System, Inc. Quote

VGM Scores

At this time, Ryder System stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.


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