On Dec 4, we maintained our Neutral recommendation on
integrated logistics and transportation solutions provider
Ryder Systems Inc.
). We are encouraged by the company's growth trajectory on
improvement in lease fleet and used vehicle sale.
However, sluggish economic growth and some lost business in
the U.K. remain causes for concern. This Florida-based company
holds a Zacks Rank #3 (Hold).
The company continues to benefit from strong market demand
with tighter transportation markets, in particular for trucks,
which has enabled the company to realize higher pricing,
propelling earnings growth. Additionally, used vehicle sales will
continue to increase, with stable pricing and solid inventories
Ryder's FMS segment will benefit from higher lease rates on
replacement vehicles, reflecting new engine technology and
improved commercial rental business. Commercial rental business
is expected to grow on higher demand in the U.S.
The expected tailwinds in FMS are expected to support earnings
next year. Further, margins in this segment would grow
impressively on improved residual value, leased fleet age, gains
from fleet management, introduction of products and services and
However, in supply chain business, the company forecasts a
lesser growth rate sequentially owing to some lost business and
lower volume expectations. Further, downsizing of customer fleet
may continue to impact the company's full service lease business
in the future.
Given continued industry consolidation, the company is exposed
to market competitiveness. Ryder could become a target for
competitors with greater capital resources and strength. Plus,
economic uncertainty along with international risk could weigh on
the company's performance going forward.
Other stocks worth considering within this sector are
Trinity Industries Inc.
The Greenbrier Companies Inc.
). TRN and GBX currently hold a Zacks Rank #1 (Strong Buy) while
UHAL carries a Zacks Rank #2 (Buy).
GREENBRIER COS (GBX): Free Stock Analysis
RYDER SYS (R): Free Stock Analysis Report
TRINITY INDS IN (TRN): Free Stock Analysis
AMERCO INC (UHAL): Get Free Report
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