Will Ryder System (R) Disappoint Earnings This Season?

Major integrated logistics and transportation solutions provider, Ryder System Inc. (R), is set to release fourth-quarter fiscal 2014 results before the opening bell on Feb 3, 2015.

In the last quarter, the company’s earnings were in line with expectations. Let’s see how things are shaping up for this announcement.

Factors at Play

Ryder’s efforts toward deploying a fuel-efficient fleet will help strengthen its foothold in the rapidly growing market of environment-friendly vehicles. Moreover, declining oil prices will help the company boost margins in the forthcoming quarter.

In Dec 2014, Ryder and Slay Transportation Company entered into a full-service lease agreement covering 142 vehicles. Hence, we believe that Ryder’s series of contract wins along with a favorable lease rate environment will propel growth for the company going ahead.

Earnings Whispers

Our proven model does not conclusively show that Ryder is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP represent the difference between the Most Accurate estimate and the Zacks Consensus Estimate. For Ryder, the Most Accurate estimate and the Zacks Consensus Estimate are both poised at $1.59. Hence, the ESP is 0.00%.

Zacks Rank: Ryder carries a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Allegiant Travel Company (ALGT) with an Earnings ESP of +7.37% and a Zacks Rank #1.

Air Lease Corporation (AL) with an Earnings ESP of +4.92% and a Zacks Rank #3.

Union Pacific Corporation (UNP) with an Earnings ESP of +0.70% and a Zacks Rank #3.