Why is Ryder (R) down 0.9% since its last earnings report?

It’s been about a month since Ryder’s (right) last earnings report. Shares lost about 0.9% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ryder at risk of a breakout? 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 better understand the important catalysts.

Outperformed Ryder in the fourth quarter

Ryder’s first-quarter 2024 earnings per share (EPS) of $2.14 surpassed the Zacks Consensus Estimate of $1.62. However, financial performance declined 23.8% year-over-year, reflecting weaker market conditions in used vehicle sales and leasing, partially offset by stronger performance from its supply chain solutions and ChoiceLease.

Total revenues of $3,098 million surpassed the Zacks Consensus Estimate of $3,013.1 million and increased 5% year-over-year. Operating revenues of $2,495 million increased 6% year-over-year, reflecting recent acquisitions and contract revenue growth, partially offset by lower commercial facility rental revenues for fleet management solutions.

Segment results

Fleet management solutions: Total revenues of $1,455 million decreased 3% year-over-year due to lower fuel costs passed on to customers and lower operating revenues.

Operating revenues were $1,251 million, down 1% year-over-year due to lower commercial leasing revenues, largely offset by higher ChoiceLease revenues.

Supply chain solutions: Total revenues of $1,302 million increased 8% year-over-year, supported by higher operating revenues and higher subcontracted transportation costs passed on to customers.

Operating revenue increased 11% year-over-year to $972 million, primarily driven by benefits from recent acquisitions.

Dedicated transport solutions: Total revenues of $563 million and operating revenues of $427 million increased 24% and 33%, respectively, year over year, driven by the acquisition of Cardinal Logistics.

Liquidity and redemption

Ryder ended the first quarter with cash and cash equivalents of $234 million, compared to $204 million at the end of the previous quarter. R’s total debt (including current portion) was $7,543 million at the end of the first quarter compared to $7,114 million at the end of the previous quarter.

R generated $526 million of net cash from operations in the reported quarter. Free cash flow was $13 million. Capital expenditure amounted to $686 million.

In the first quarter of 2024, Ryder paid a dividend of $35 million and repurchased shares worth $51 million.

The story continues

Perspectives

Ryder expects second-quarter 2024 adjusted EPS in the range of $2.75 to $2.95.

Ryder has updated its guidance for 2024. It now estimates adjusted EPS for the year to be between $11.75 and $12.50 (previous guidance: $11.50 to $12.50).

Adjusted ROE (return on equity) is currently suggested in the range of 15.5%-16.5% (previously: 15% – 16.5%).

Management currently expects total revenues to grow by almost 10% (previous view: 13% growth). Operating revenues (adjusted) are now forecast to increase by 10% (previously: increase by 13%).

Net cash from operations is expected to be $2.4 billion. Capital expenditure is estimated at $3.2 billion (previously: $3.3 billion).

How have estimates changed since then?

It turns out that estimate revisions have been trending upwards over the past month.

VGM results

At this point, Ryder has a nice B growth score, a grade with the same momentum score. Plotting a somewhat similar path, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company show an upward trend, and the scale of this revision looks promising. Notably, Ryder carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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