Here's Why Investors Should Give Ryder System (R) a Miss Now
Ryder System R is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 0.3% downward over the past 90 days. For the current year, the consensus mark for earnings has moved 1.1% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Unimpressive Price Performance: R has declined 1.2% over the past three months against its industry’s 15.1% growth.
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Weak Zacks Rank and Style Score: Ryder currently carries a Zacks Rank #4 (Sell). Moreover, R’s current Momentum Style Score of C shows its short-term unattractiveness.
Other Headwinds: Ryder is suffering from weak freight demand. Due to this, first-quarter 2023 revenues at Ryder’s primary division, Fleet Management Solutions, declined 2% year over year.
Ryder’s weak liquidity position is also concerning. At first-quarter 2023 end, the company’s cash and cash equivalents were $253 million, much lower than the current debt of $1,674 million. This implies that the company does not have sufficient cash to meet its current debt obligations. High capital expenditures are also playing spoilsport.
Stocks to Consider
Some better-ranked stock in the Zacks Transportation sector are Copa Holdings CPA and Global Ship Lease GSL, currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields. CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields.
Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 22.4% upward over the past 60 days.
Global Ship Lease is being aided by the bullish sentiment surrounding the containership market. GSL’s strong balance sheet is an added positive. The uptick in trading volumes also bodes well.
The Zacks Consensus Estimate for current-year earnings has moved up 4.2% over the past 60 days. GSL outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 15.64%.
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Ryder System, Inc. (R) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Global Ship Lease, Inc. (GSL) : Free Stock Analysis Report
