Ryder (R) Down 31.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Ryder (R). Shares have lost about 31.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ryder due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ryder Incurs Loss in Q4

Ryder reported fourth-quarter 2019 loss (excluding $1.01 from non-recurring items) of 1 cent per share against the Zacks Consensus Estimate of earnings 3 cents. Moreover, the bottom line declined more than 100% year over year primarily due to softening of rental demand. Total revenues amounted to $2,276.5 million, which beat the Zacks Consensus Estimate of $2,264.4 million. Also, the top line inched up 0.8% year over year.

Segmental Results

Fleet Management Solutions (FMS): Total revenues at this segment amounted to $1.4 billion, which rose 4% year over year. Operating revenues (excluding fuel) summed $1.2 billion, up 6% year over year. Segmental results were driven by larger average fleet size and favorable pricing of new vehicles. Notably, the lease fleet increased 7% in 2019 on a year-over-year basis.

Dedicated Transportation Solutions (DTS): Total revenues amounted to $346 million, down 5% from the year-ago quarter’s figure. Operating revenues (excluding fuel and subcontracted transportation) rose 4% year over year to $241 million backed by higher pricing and addition of new business.

Supply Chain Solutions (SCS): Total revenues in this segment were $649 million, down 3% year over year. Operating revenues (excluding fuel and subcontracted transportation) declined 5% year over year to $466 million. Segmental results were hurt primarily by previously-announced lost business and customer labor strikes.

Liquidity

Ryder exited the year with cash and cash equivalents of $73.6 million compared with $68.1 million at the end of 2018. The company’s total debt rose 19.2% to $7.92 billion.

As the company is investing substantially in its lease and rental fleets, capital expenditures (net) increased 12% year over year to $3.1 billion at 2019-end. Operating cash flow for 2019 was $2.1 billion, up 23.5% year over year.

2020 Outlook

For first-quarter 2020, the company anticipates loss of 65-80 cents per share. For 2020, it expects adjusted earnings per share between $1.10 and $1.50.

The company expects below-par conditions in rental to persist in 2020 due to the lackluster freight environment, particularly for heavy duty tractors. Net capital expenditure for 2020 is predicted to be around $1.7 billion. Free cash flow is predicted to be positive $350 million owing to lower net capital expenditures.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -1100.91% due to these changes.

VGM Scores

Currently, Ryder has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Ryder has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.