Ryder System, Inc. (
On January 10th, our Value Rank Buy specialist Tracey Ryniec
wrote about Ryder System and its strong growth combined with
In the period since, Ryder reported earnings that fell in line
with estimates. Prior to that they had 5 straight quarters of
double digit growth and beat estimates 7 time, so even a positive
report had high expectations and was met with some selling.
Revenue growth looked strong across most businesses in 2011,
but Ryder did note some higher pension costs in 2012 as well as
risks with a rising US dollar and only moderate improvements in
freight and economic activity moving forward.
Ryder recently issued 350 million in 5 year bonds with a 2.5%
coupon, which were met with 5 times more buyers than were needed to
complete the offering.
Based on facts from the report and the recent pullback in
shares, I believe that Tracey's original thesis stands and Ryder
still remains a viable value stock with a current P/E of 12.77 and
a price to sales ratio of .44.
January 10th article:
by Tracey Ryniec
Some of the transportation companies are still seeing double
digit earnings growth. Ryder System, Inc. (
) raised full year guidance in October, despite the uncertain
economic environment. This Zacks #1 Rank (Strong Buy) is a value
stock with a forward P/E of 13.4.
Ryder offers commercial transportation, logistics and supply
chain management solutions to global customers.
The company has 3 segments: Fleet Management Solutions, which
offers acquisition, financing and maintenance of vehicles, Supply
Chain Solutions, which arranges logistic services and Dedicated
Contract Carriage which provides customers with vehicles, drivers
and administrative support including routing and scheduling.
Ryder Beat for the 7th Time in a Row
On Oct 25, Ryder reported its third quarter results and surprised
on the Zacks Consensus Estimate by 6.9%. It was the 7th consecutive
earnings beat. Earnings per share were $1.09 compared with the
consensus of $1.02. It made just 76 cents in the year ago
Revenue jumped 19% to $1.6 billion from $1.3 billion in the
third quarter of 2010. Revenue was up in all three of the company's
Fleet Management Solutions saw a 15% jump. It saw continuing
strong demand and higher pricing for its commercial rental and used
Supply Chain Solutions grew 26%, but it was largely due to the
impact of an acquisition. Dedicated Contract Carriage (DCC) saw
revenue rise 31% reflecting an acquisition and the pass through of
higher fuel costs.
Raised 2011 Guidance Again
Ryder has been consistently outperforming even its own guidance. It
had been more conservative given the not-so-great general economic
environment and GDP trends.
But, at the end of October, the company yet again raised its
full year guidance to a range of $3.44 to $3.49 from the prior
range of $3.33 to $3.43.
Zacks Consensus Estimates Rise
Analysts are bullish about 2011. The Zacks Consensus Estimate has
risen by 6 cents to $3.49 in the last 90 days. That is at the high
end of the company's guidance range.
It is also earnings growth of 57.1% compared to the $2.22 it
made in 2010.
Even with the economic uncertainty, double digit growth is also
expected in 2012. The 2012 Zacks Consensus Estimate has risen to
$4.09 from $4.08 in the last 3 months. One estimate has actually
moved higher in just the last week.
That is further earnings growth of 17.2%.
Valuations Still Attractive
Shares plunged over the summer, in the general market sell off.
While they have generally rebounded, Ryder still has cheap
In addition to a P/E under 15, which is what I use as a cut-off
for value stocks, Ryder also has a price-to-book of 1.9. A P/B
under 3.0 usually indicates "value."
It also has a price-to-sales ratio of 0.5. A P/S ratio under 1.0
can mean a company is undervalued.
In addition to solid valuations, Ryder also rewards investors
with both a share repurchase program and a dividend, currently
Ryder is scheduled to report fourth quarter results on Feb 2.
Investors should stay tuned to see if Ryder can continue to defy
the greater economic trends and post double digit earnings
Tracey Ryniec is the Value Stock Strategist for
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her at
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