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Here's Why Investors Should Give Ryder System Stock a Miss Now
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Ryder System (R - Free Report) is grappling with weak freight market conditions, which are adversely impacting the company’s performance. Weak liquidity also does not bode well for R, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Ryder: Key Risks to Watch
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-year earnings has moved 1.02% south in the past 60 days. For the next year, the consensus mark for earnings has been revised 5.5% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have dropped 8.3% year to date compared with the industry’s 7.1% decline.
Image Source: Zacks Investment Research
Weak Zacks Rank: Ryder currently carries a Zacks Rank #4 (Sell).
Bearish Industry Rank: The industry to which R belongs currently has a Zacks Industry Rank of 207 (out of 246). Such an unfavorable rank places it in the bottom 16% of Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.
Headwinds: The freight market downturn is adversely impacting Ryder’s prospects. The company’s Fleet Management Solutions segment is facing weak rental demand, with rental utilization dropping from 75% in the fourth quarter of 2023 to 73% in the fourth quarter of 2024.
High operating costs are also putting pressure on Ryder’s bottom line, as the cost of services increased by 9% year over year in the fourth quarter of 2024.
Increased operating expenses and weak liquidity pose a significant threat to Ryder’s financial stability. The company exited the December-end quarter with a current ratio (a measure of liquidity) of 0.75. A current ratio of less than 1 is not desirable as it indicates that the company may not hold sufficient cash to meet its short-term obligations.
SKYW has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 16.7%.
Frontier Group sports a Zacks Rank of 1 at present. ULCC has an expected earnings growth rate of more than 300% for the current year.
The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average surprise is 1.1%.
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Here's Why Investors Should Give Ryder System Stock a Miss Now
Ryder System (R - Free Report) is grappling with weak freight market conditions, which are adversely impacting the company’s performance. Weak liquidity also does not bode well for R, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Ryder: Key Risks to Watch
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-year earnings has moved 1.02% south in the past 60 days. For the next year, the consensus mark for earnings has been revised 5.5% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have dropped 8.3% year to date compared with the industry’s 7.1% decline.
Image Source: Zacks Investment Research
Weak Zacks Rank: Ryder currently carries a Zacks Rank #4 (Sell).
Bearish Industry Rank: The industry to which R belongs currently has a Zacks Industry Rank of 207 (out of 246). Such an unfavorable rank places it in the bottom 16% of Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.
Headwinds: The freight market downturn is adversely impacting Ryder’s prospects. The company’s Fleet Management Solutions segment is facing weak rental demand, with rental utilization dropping from 75% in the fourth quarter of 2023 to 73% in the fourth quarter of 2024.
High operating costs are also putting pressure on Ryder’s bottom line, as the cost of services increased by 9% year over year in the fourth quarter of 2024.
Increased operating expenses and weak liquidity pose a significant threat to Ryder’s financial stability. The company exited the December-end quarter with a current ratio (a measure of liquidity) of 0.75. A current ratio of less than 1 is not desirable as it indicates that the company may not hold sufficient cash to meet its short-term obligations.
Stocks to Consider
Investors interested in the Transportation sector may also consider SkyWest (SKYW - Free Report) and Frontier Group (ULCC - Free Report) .
SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SKYW has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 16.7%.
Frontier Group sports a Zacks Rank of 1 at present. ULCC has an expected earnings growth rate of more than 300% for the current year.
The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average surprise is 1.1%.