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Here's Why Ryder System (R) Deserves a Place in Your Portfolio

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Shares of Ryder System R have been displaying an uptrend, having gained 24.3% so far this year compared with the 17.1% appreciation of its industry.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Let’s look into the factors that are driving this currently Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today's Zacks #1 Rank stocks here.

Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 24.3% upward over the past 60 days. For 2021, the consensus mark for earnings has moved 31.8% north in the same time frame. The favorable estimate revisions reflect the confidence of brokers in the stock.

Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the path of estimate revisions serves as an important pointer when it comes to ascertaining the stock price.

Impressive Revenue Growth: The Zacks Consensus Estimate for current-quarter revenues is pegged at $2.19 billion, indicating a 15.3% rise from the year-ago quarter’s reported figure. Similarly, the consensus mark for current-year revenues stands at $8.97 billion, implying a 6.5% increase from the prior-year period’s reported number.

Improving Freight Scenario: Ryder is benefiting from brightening economic and freight market conditions. With this uptick, the recovery in the company’s Supply Chain Solutions (SCS) segment is encouraging. The unit is gaining from new business and higher volumes. Moreover, the company’s Fleet Management Solutions (FMS) segment is strong on favorable rental pricing. Backed by a positive freight environment, the company anticipates the FMS segment to perform well, aided by its lease, rental and used vehicle sales. The company expects solid pricing in the rental and used vehicle sales to continue.

Bullish Industry Rank: The industry to which Ryder belongs currently has a Zacks Industry Rank of 111 (of 250 plus groups). Such a solid rank places companies in the top 44% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.

In fact, a mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.

Other Stocks to Consider

Investors interested in the broader Zacks Transportation sector can also consider stocks like Landstar System, Inc. LSTR, C.H. Robinson Worldwide CHRW and Herc Holdings Inc. HRI. While Herc Holdings and C.H. Robinson sport a Zacks Rank of 1, Landstar carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Landstar, C.H. Robinson and Herc Holdings is projected at 12%, 9% and 42.9%, respectively.

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Ryder System, Inc. (R) : Free Stock Analysis Report

C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report

Landstar System, Inc. (LSTR) : Free Stock Analysis Report

Herc Holdings Inc. (HRI) : Free Stock Analysis Report

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Zacks Investment Research