Ryder System (NYSE: R) shares jumped 5.4% on February 16, after the company delivered stronger-than-expected fourth-quarter results, and also provided FY2022 guidance well above the analyst expectations.
Ryder is a U.S.-based transportation and logistics company known for its fleet of commercial rental trucks, and specializes in fleet management, supply chain management, and dedicated transportation management. Shares have gained 26% over the past year.
The quarterly beat was driven by robust revenue growth across all business segments due to strong demand and pricing, as well as benefits from maintenance cost-savings initiatives.
Q4 Beat
Adjusted earnings of $3.52 per share more than quadrupled year-over-year and significantly beat analysts’ expectations of $2.46 per share. The company reported earnings of $0.83 per share for the prior-year period.
Further, revenues jumped 17% year-over-year to $2.6 billion and exceeded consensus estimates of $2.48 billion.
FY2022 Outlook
Based on robust Q4 results and planned initiatives, management issued the financial guidance for FY2022.
The company forecasts FY22-adjusted earnings in the range of $11 per share to $12 per share, much higher than the consensus estimate that is pegged at $8.95 per share. Revenues are forecast to grow 10% year-over-year.
For the fiscal first quarter, adjusted earnings are likely to range between $2.20 and $2.35 per share.
Markedly, the company now forecasts return on equity (ROE) of 20% to 22% compared to the ROE target of 15% guided earlier.
CEO Comments
Ryder CEO, Robert Sanchez, commented, “We expect a strong used vehicle sales and rental environment to continue in 2022, slowly moderating in the second half of the year. We plan to continue to benefit from our lease pricing initiative. We also expect our supply chain and dedicated businesses to achieve their high single-digit earnings targets in the second half of the year. This reflects the benefits of growth from new contract signings and pricing adjustments addressing labor and supply chain disruptions.”
He further concluded, “Lastly, based on the results from our return improvement actions to-date, as well as planned initiatives and our outlook, we have raised our ROE target over the cycle from 15% to a high-teens range, driven by an improved long-term outlook for FMS returns.”
Analysts Recommendation
Overall, the stock has a Hold consensus rating based on 5 Holds. The average Ryder System stock forecast of $88.40 implies 9.57% upside potential from current levels, at the time of writing.
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