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Ryder System (R) Q3 Earnings: A Disappointment in Store?

Ryder SystemR is scheduled to report its third-quarter 2015 earnings results on Oct 22, before the commencement of trading. Last quarter, the company had posted a positive earnings surprise of 1.85%. Moreover, Ryder System's earnings have outpaced the Zacks Consensus Estimate in three of the past four quarters, with an average beat of 2.35%.

Let's see how things are shaping up prior to this announcement.

Factors at Play

We are disappointed by the company's decision to slash its earnings per share outlook for the third quarter of 2015. The company now expects earnings per share in the third quarter in the band of $1.72 to $1.74 (the previous outlook had called for earnings in the range of $1.82 to $1.87 per share). The lowered EPS guidance mainly reflects weakness at the Fleet Management Solutions segment.

While trimming the outlook, the company stated that third quarter earnings were hurt "by a greater than planned number of out-of-service vehicles, as maintenance technicians were supporting new levels of fleet growth across all product lines".

Since bulk of the revenues at Ryder System is derived from the Fleet Management Solutions division, the segment's below-par performance will hamper the company's third quarter results significantly. Moreover, Ryder System faces certain headwinds such as unstable economic conditions, heavy capital expenditures, mounting debts, stiff competition and federal regulations.

Earnings Whispers

Our proven model does not conclusively show that Ryder System is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : Ryder System has an earnings ESP of 0.0%.That is because the Most Accurate estimate is in line with the Zacks Consensus Estimate at $1.72 per share.

Zacks Rank : Ryder System has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions. We note that the Zacks Consensus Estimate at Ryder System has gone down by 13 cents per share for the third quarter to $1.72 over the last 30 days.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat in the upcoming quarter:

American Airlines Group AAL has an earnings ESP of +0.74% and a Zacks Rank #2. The company will report third-quarter results on Oct 23.

Alaska Air Group, Inc. ALK , the parent company of Alaska Airlines, will unveil its third-quarter earnings numbers on Oct 22, before market opens. The company carries a Zacks Rank #2 and has an earnings ESP of +0.96%.

With an earnings ESP of +1.14% and a Zacks Rank of #3, Canadian National Railway Company CNI is scheduled to report third-quarter results on Oct 27.

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RYDER SYS (R): Free Stock Analysis Report

CDN NATL RY CO (CNI): Free Stock Analysis Report

AMER AIRLINES (AAL): Free Stock Analysis Report

ALASKA AIR GRP (ALK): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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