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Ryder System (R) Beats on Q4 Earnings, Issues 2018 View

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Ryder System, Inc.’s (R - Free Report) fourth-quarter 2017 earnings (excluding $10.74 from non-recurring items) of $1.37 per share beat the Zacks Consensus Estimate of $1.35. Moreover, the bottom line increased 28% on a year-over-year basis.

Ryder System reported total revenues of $1939.7 million, which surpassed the Zacks Consensus Estimate of $1834.9 million. The top line increased 12.2% on a year-over-year basis with growth witnessed in all segments.

Segment Results

Fleet Management Solutions (FMS): Total revenues were $1.24 billion, up 8% year over year. Operating revenues (excluding fuel) came in at $1.06 billion, up 8% year over year.  Segmental results were aided by an increase in commercial rental revenues on the back of increased demand and higher pricing.

Dedicated Transportation Solutions: Total revenues came in at $284 million, up 11% from the year-ago quarter.  Operating revenues (excluding fuel and subcontracted transportation) rose 3% year over year to $198 million.

Supply Chain Solutions: Total revenues in the quarter under review were $540 million, up 26% year over year.  Operating revenues (excluding fuel and subcontracted transportation) improved 16% year over year to $411 million.

Ryder System, Inc. Price, Consensus and EPS Surprise


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


Ryder System exited the fourth quarter with cash and cash equivalents of $78.3 million compared with $58.8 million at the end of 2016. The company had total debt of  $5,409.7 million compared with  $5,391.3 million at the end of 2016.

Q1 & 2018 Forecast

The company expects first-quarter 2018 earnings (adjusted) per share in the band of 83 cents-90 cents compared with 82 cents in the first quarter of 2017. The Zacks Consensus Estimate for the same stands at $1. However, the company projects the bottom line in the fourth quarter to be hurt by increased expenditures pertaining to FMS overhead spending including commissions and investments in sales, marketing and technology to fund growth besides increased vehicle depreciation.

The below-par earnings guidance for the first quarter seemed to have displeased investors. Consequently, shares of the company declined 9.3% at the close of business on Feb 16.

For 2018, the company estimates earnings (adjusted) per share between $5.40 and $5.70 compared with $4.53 achieved in 2017. Total revenues for the year are anticipated to be up around 6% to $8 billion. The Zacks Consensus Estimate for 2018 earnings is pegged at 5.87 per share on revenues of $7.54 billion.
The company anticipates substantial earnings growth across all business segments in 2018. It hopes to achieve ChoiceLease fleet growth of around 6,500 vehicles in the year. Additionally, the company predicts robust rental revenue growth in the period.

Moreover, the new tax law is expected to benefit the bottom line significantly in the year mainly owing to lower effective income tax rate. Also, the zero-based budgeting process adopted by the company is likely to generate significant cost savings by lowering overhead costs. This in turn might aid the top and the bottom line in the long run.

Zacks Rank & Other Key Picks

Ryder System carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include Greenbrier Companies, Inc. (GBX - Free Report) , Textainer Group Holdings Limited (TGH - Free Report) and GATX Corporation (GATX - Free Report) . While Greenbrier Companies and Textainer Group sport a Zacks Rank #1 (Strong Buy), GATX carries a Zacks Rank of2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Greenbrier Companies, Textainer Group and GATX have gained more than 18%, 9% and 17%, respectively, in the last six months.

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