Major integrated logistics and transportation solutions provider, Ryder System Inc.R is scheduled to release fourth-quarter 2016 results before the opening bell on Feb 2.
In the third quarter, the company had reported better-than-expected earnings and revenues. The company's adjusted earnings per share of $1.67 beat the Zacks Consensus Estimate of $1.65. However, the bottom line declined 4% year over year. Ryder System reported revenues of $1,724 million that surpassed the Zacks Consensus Estimate of $1,701 million. The top line also improved over 3% on a year-over-year basis.
Additionally, the company surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters, with an average beat of 1.01%.
Let's see how things are shaping up for this announcement.
Our quantitative model does not conclusively show that Ryder System will beat estimates 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. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Ryder System is -2.14% as the Most Accurate estimate is lower than the Zacks Consensus Estimate of $1.40 per share by 3 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank: The company has a Zacks Rank #3.
Please note that we advise investors not to consider Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement.
Ryder System, Inc. Price and EPS Surprise
Factors likely at Play
Given that the Fleet Management Solutions division accounts for the bulk of the revenues at Ryder System, the segment's below-par performance is likely to hamper the company's fourth-quarter results significantly. Moreover, results are expected to be impacted by unfavorable foreign currency movements. Based on these factors, the company now expects fourth-quarter adjusted earnings per share in the band of $1.35-$1.50. This is below the fourth-quarter 2015 figure of $1.66 per share.
Results are likely to be hurt by lower rental demand and soft used vehicle volumes. Additionally, stiff competition is hurting the company's profitability. Moreover, we are concerned about the company's weak balance sheet. The headwinds are likely to force the company to come out with a tepid guidance for 2017. Nevertheless, the company's efforts to reward shareholders are impressive.
Stocks to Consider
Investors who are interested in the transportation space may consider the following stocks. This is because our model shows that these companies possess the right combination of elements to post an earnings beat this quarter.
Spirit AirlinesSAVE holds a Zacks Rank #2 and an Earnings ESP of +1.37%. It is scheduled to report fourth-quarter results on Feb 7. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 4.71%. You can see the complete list of today's Zacks #1 Rank stocks here .
C.H. Robinson WorldwideCHRW has a Zacks Rank #3 and an Earnings ESP of +2.38%. It is scheduled to report fourth-quarter results on Jan 31. The company beat the Zacks Consensus Estimate in two of the last four quarters.
Alaska Air GroupALK carries a Zacks Rank #2 and an Earnings ESP of +8.21%. It is scheduled to report fourth-quarter results on Feb 8. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 3.36%.
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