Ryder System, Inc. R has been going strong on the back of impressive growth across all segments. The company’s financial results over the past four quarters bear testimony to this uptrend. Evidently, it surpassed on both earnings and revenues in each of the trailing four quarters. The company’s solid earnings history delivered an average beat of 4.5% in the preceding four quarters. Additionally, the company’s top and bottom line improved substantially in the last three consecutive quarters.
For instance, during the second quarter, revenues at the Fleet Management Solutions, Dedicated Transportation Solutions and Supply Chain Solutions improved 11%, 21% and 30%, respectively, on a year-over-year basis. A substantial rise in segmental revenues has been witnessed in the past three quarters as well.
Moreover, the company’s outlook for the third quarter as well as the full year is encouraging. For the ongoing quarter, it estimates adjusted earnings per share of $1.55-$1.65, higher than $1.34 in the year-ago period. Driven by expectations of healthy improvements in rental, supply chain and dedicated businesses, Ryder raised its earnings guidance for 2018. It now anticipates adjusted earnings per share of $5.62-$5.82 compared with $5.45-$5.70, projected earlier. Further, the company expects organic lease fleet growth of 8,500 vehicles for the full year, an increase of 2,000 units from the past projection.
Ryder’s efforts to bolster its product portfolio via acquisitions are also encouraging. It carried out two major buyouts back-to-back over a span of two months. In June, it completed the transaction of Metro Truck & Tractor Leasing, expanding its footprint in the Baltimore Metro Area where demand for fleet management services is high. Additionally, in April, Ryder boosted its e-commerce portfolio through the MXD Group buyout. Both these consolidations are anticipated to be partly accretive to the company’s earnings in the current year. Maximum benefits are anticipated to be reaped from it in the coming years.
The company’s initiatives to reward shareholders through dividend payments are another positive. Ryder hiked its quarterly dividend twice this year. In February, it raised quarterly cash dividend by 6 cents to 52 cents per share while the same was further lifted to 54 cents in July. The frequent dividend increases can perhaps be attributed to the amended tax law, which reduces corporate tax rates significantly, leaving more cash at disposal to fund these shareholder-friendly moves.
Owing to the above tailwinds, shares of the company have rallied more than 15% in the past three months, outperforming its industry’s 7.8% rise.
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The optimism revolving around the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised 3.4% upward over the past 60 days. The company’s VGM Score of A further highlights its short-term attractiveness. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three scores.
The company’s solid Zacks Rank #2 (Buy) very well justifies the overall bullish picture. We thus believe that it would be prudent for investors to add the Ryder stock in their portfolio now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Key Picks
Other top-ranked stocks in the broader Transportation sector include SkyWest, Inc SKYW, C.H. Robinson Worldwide, Inc. CHRW and Trinity Industries, Inc. TRN. While, C.H. Robinson holds a Zacks Rank of 2, SkyWest and Trinity sport a Zacks Rank #1.
Shares of SkyWest, C.H. Robinson and Trinity have rallied more than 86%, 33% and 22%, respectively, in a year.
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