It has been about a month since the last earnings report for Ryder (R). Shares have added about 14.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ryder 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.
Ryder Beats Q3 Earnings Estimates
Quarterly earnings of $4.45 per share (excluding 36 cents from non-recurring items) surpassed the Zacks Consensus Estimate of $4.10. The bottom line increased 74.5% year over year on the back of higher revenues.
Total revenues of $3,035.5 million also outperformed the Zacks Consensus Estimate of $2,934.9 million. The top line increased 3.4% year over year on strong segmental performances.
Lets look at the performance of the segments
Fleet Management Solutions: Total revenues of $1,582 million were up 10% year over year. Operating revenues summed $1,303 million, up 4% year over year. Segmental revenues benefited from higher rental revenue driven by strong demand and higher pricing. Revenues increased owing to higher fuel prices being passed through to customers as well.
Supply-Chain Solutions: Total revenues in the segment were $1,207 million, up 50% year over year. Operating revenues rose 49% year over year to $835 million on the back of contributions from acquisitions and double-digit revenue growth in all industry verticals reflecting new business, higher volumes and favorable pricing.
Dedicated Transportation Solutions: Total revenues amounted to $454 million, up 19% from the year-ago quarter’s figure. Operating revenues climbed 17% to $317 million. The revenue uptick was driven by new business and favorable pricing.
Liquidity
Ryder exited the third quarter with cash and cash equivalents of $456.3 million compared with $234 million at the end of 2021. R’s total debt (including the current portion) rose to $6,334.1 million at the end of the third quarter from $6,579.7 million reported at 2021-end.
During the first nine months of 2022, gross capital expenditures came in at $2032.4 million. Free cash flow in the period was $886.5 million, compared with $829 million in the first nine months of 2021.
Outlook
For the fourth quarter of 2022, Ryder expects its adjusted earnings per share in the range of $3.18 – $3.38. Ryder now expects total revenues and operating revenues to increase approximately 23% and 18%, respectively, in 2022 (previous view: they were expected to rise 22% and 16%, respectively). Adjusted EPS for the whole year is estimated in the range of $15.65 – $15.85.
R expects free cash flow in the range of $800-900 million (previous view: $750-$850 million) in 2022. Adjusted ROE (return on investment) is expected to be 26-27% (previous view: 25-26%).
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 10.49% due to these changes.
VGM Scores
At this time, Ryder has a strong Growth Score of A, though it is lagging a lot on the Momentum Score 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 A. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ryder has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ryder belongs to the Zacks Transportation – Equipment and Leasing industry. Another stock from the same industry, Gatx (GATX), has gained 9.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Gatx reported revenues of $321 million in the last reported quarter, representing a year-over-year change of +2.4%. EPS of $1.12 for the same period compares with $1.11 a year ago.
Gatx is expected to post earnings of $1.38 per share for the current quarter, representing a year-over-year change of -12.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Gatx has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Ryder System, Inc. (R) : Free Stock Analysis Report
GATX Corporation (GATX) : Free Stock Analysis Report
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