Ryder System Inc.(R) recently slashed its EPS guidance for the second quarter of 2012 as well as for full fiscal 2012, primarily based on lower demand for commercial rental rates for trucks and higher medical benefit costs.
Ryder expects its EPS for the second quarter of 2012 to remain in the range of 90 to 95 cents, down from its previous outlook of $1.07 to $1.12. Similarly, the company also expects EPS for full fiscal 2012 to remain in the range of $3.65 to $3.85, much lower than its earlier mentioned guidance of $4.02 to $4.12.
Ryder remains cautious regarding its growth prospects for fiscal 2012, primarily due to sluggish demand in the trucking industry. This is also expected to persist til the end of the year.
Chief among the company’s remedial measures to deal with the situation include the downsizing its commercial fleet size, thereby utilizing used vehicle inventories. The company also believes that if the cost cutting measures are successfully implemented, it will boosts its EPS by 18 cents in the third quarter of 2012.
In the first quarter of fiscal 2012, Ryder reported adjusted earnings of 59 cents that surpassed the Zacks Consensus Estimate by a penny. The company reported revenue of $1,536.3 million, which also outpaced the Zacks Consensus Estimate of $1,516 million.
Currently, the company is currently increasing investment in fleet management solutions, which is telling on its cash balance. Moreover, stiff competition from peers like Con-Way Inc. (CNW) could limit the near-term growth for the company.
Currently, Ryder has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
Ryder System Inc. is a Florida corporation founded in 1933, and recognized as the world's largest provider of integrated logistics and transportation solutions.
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