Ryder System Missed Earnings but Beat Revenues, Stock Down 7%

Ryder System (R) provides commercial fleet management, dedicated transportation services, and supply chain solutions. Today, the company announced its third-quarter earnings before the market opened.

Ryder’s adjusted EPS came in at $1.64, missing Wall Street analysts’ adjusted EPS estimate by a narrow margin. The company’s adjusted EPS jumped 23.3% YoY (year-over-year) in the quarter.

Today, Ryder stock opened at $60.57, marginally down from its closing price of $60.97 on October 25. The company’s stock experienced a free fall in the first hour of trading, touching $55.16.

However, its stock recovered marginally and reached $58.68. The stock couldn’t hold that level and declined in the mid-trading sessions, touching $54.16. From there, the company’s stock price moved sideways. An earnings miss coupled with a lower operating margin pressured Ryder’s stock price.

Ryder System (R) was able to surpass analysts’ revenue estimates of $2.1 billion by 2.5%. The company reported third-quarter revenues of $2.15 billion, up 16.8% YoY from $1.84 billion. Its revenue growth resulted from higher volumes and business growth across its three business segments.

The company’s SCS (Supply Chain Solutions) segment’s revenues rose 29.0% to $628.5 million in the third quarter from $488.5 million in the third quarter of 2017. Ryder’s DTS (Dedicated Transport Solutions) segment reported 25.0% YoY growth and revenues of $340.6 million in the quarter. The company’s FMS (Fleet Management Solutions) segment reported 12.0% YoY growth with revenues of $1.33 billion, up from $1.1 billion in the third quarter of 2017.

Ryder System’s CEO, Robert Sanchez, noted during the company’s third-quarter earnings call, “Our overall earnings outlook for the fourth quarter remains on track with our prior expectations. We anticipate year-over-year earnings growth in Fleet Management Solutions driven by strong operating performance and a lower impact from used vehicle sales and depreciation headwinds. Based on robust year-to-date lease sales activity, our outlook for ChoiceLease fleet growth remains at a record 8,500 vehicles for the full year.”

Sanchez added, “We expect a continued strong rental demand environment and favorable year-over-year results, although to a lesser extent, due to more challenging prior-year comparisons.”

Sanchez continued, “Dedicated Transportation Solutions is anticipated to deliver continued double-digit revenue growth and improved earnings performance as compared to the third quarter. We expect strong year-over-year improvement in Supply Chain Solutions results consistent with year-to-date performance.”

Ryder revised its 2018 GAAP EPS forecast to $4.88–$4.98, compared to the previous forecast of $4.71–$4.91. The company narrowed its 2018 forecast for EPS from continuing operations to $5.72–$5.82 from the previous projection of $5.62–$5.82.

Among the major road transportation (XTN) companies, J.B. Hunt Transport (JBHT), Old Dominion Freight Line (ODFL), and Landstar System (LSTR) surpassed analysts’ adjusted EPS estimates for the third quarter.