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What's in the Cards for Ryder System (R) in Q1 Earnings?

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Major integrated logistics and transportation solutions provider, Ryder System Inc. (R - Free Report) is scheduled to release first-quarter 2017 results, before the market opens on Apr 25.

The company missed earnings but beat revenue estimates 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 owing to tough market conditions for used vehicles.

Let’s see how things are shape up for this announcement.

Earnings Whispers

Our quantitative model does not show conclusively that RyderSystem is likely to beat earnings in the first quarter. According to our proven model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase the odds of an earnings surprise. However, that is not the case as highlighted below.

Zacks ESP: The Earnings ESP for Ryder System is -1.19% as the Most Accurate estimate is pegged at 83 cents per share while the Zacks Consensus Estimate is at 84 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: RyderSystem carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s -1.19% ESP complicates our surprise prediction.

Please note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Ryder System, Inc. Price and EPS Surprise

 

Ryder System, Inc. Price and EPS Surprise | Ryder System, Inc. Quote

Factors Likely at Play

Ryder System is struggling due to challenging market conditions for used vehicles. The company continues to face headwinds in the form of a weak balance sheet and high capital expenditures which might impact its performance. The company’s high debt levels also raise concerns. We expect the above headwinds to hurt the company’s first quarter results.

In fact, Ryder System has issued a lackluster view for first quarter 2017 with respect to the bottom line.  The company expects first-quarter adjusted earnings per share in the band of $0.82 to $0.92. This is way below the first quarter 2016 figure of $1.12 per share. Lower rental demand coupled with soft used vehicle volumes led to the dull view.

We are, however, encouraged by the company's efforts to reward its shareholders through dividend payments. In a shareholder friendly move, the board of directors at Ryder System approved a quarterly cash dividend of 44 cents per share (annualized $1.76 per share) during the first quarter of 2017.

Price Performance

Shares of Ryder System underperformed the Zacks categorized Transportation - Equipment and Leasing industry in the last three months. The stock appreciated 0.17% while the industry gained 0.18%.

Stocks to Consider

Investors interested in the broader transportation space may consider American Airlines Group (AAL - Free Report) , Air Lease Corporation (AL - Free Report) and C.H. Robinson Worldwide (CHRW - Free Report) as our model shows these possess the right combination of elements to post an earnings beat in the first quarter.

American Airlines has an Earnings ESP of +7.55% and a Zacks Rank #3. The company will report first-quarter 2017 results on Apr 27.

Air Lease has an Earnings ESP of +1.16% and a Zacks Rank #3. The company will report first-quarter 2017 results on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

C.H. Robinson has an Earnings ESP of +2.50% a Zacks Rank #3. The company will report first-quarter 2017 results on Apr 25.

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