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Ryder (R) Stock Up 17.03% in Friday's Trading: Here's Why

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Shares of Ryder System R gained in excess of 17% in Friday’s trading following a buyout offer. The stock of the transportation company had shot up 17.4% at a particular point of time on May 13 and closed the session at $83.65 a share, up 17.03% from Thursday’s closing price.

The massive single-day jump was owing to an unsolicited buyout offer from Hedge Fund HG Vora Capital Management. HG Vora currently owns 9.9% of Ryder’s common stock. A 13D filing by Ryder informed that HG Vora believes the R stock to be currently undervalued and hence represent an attractive investment opportunity.

More specifically, the private equity firm proposed to acquire all the outstanding shares of Ryder for $86 per share that are not currently held by the former. The purchase price for this all-cash offer reflects a premium of 20.3% to Ryder’s closing price of $71.48 on May 12.

The Miami-based logistics and truck rental company, currently sporting a Zacks Rank #1 (Strong Buy), confirmed the receipt of the unsolicited indication of interest from one of its largest stakeholders and reviewing the same. Per Ryder’s press release, consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Ryder board of directors will carefully review and evaluate the indication of interest to determine the course of action that it believes is in the best interest of R and its shareholders.

You can see the complete list of today’s Zacks #1 Rank stocks here.

In addition to being a Buy-rated stock, Ryder has a Value Style Score of A. The Value Style Score will help us filter stocks that are undervalued. Ryder currently trades at a forward P/E of 6.2X, way below the industry’s 13.7X.

Moreover, Ryder has attractive growth potential, as highlighted by its Growth Style Score of B. Ryder released better-than-expected first-quarter 2022 results on both earnings and revenue count, driven by higher rental revenues on strong demand and favorable pricing. Evidently, management raised the full-year earnings guidance. Adjusted EPS for the full year is now estimated in the range of $13.00-$14.00 (previous outlook: $11.00-$12.00).

Lets look at the results of a few other companies in the Zacks Transportation sector which like Ryder, reported better-than-expected earnings per share and revenues for first-quarter 2022.

Southwest Airlines LUV delivered a positive surprise of 5.88% and 0.55% concerning both EPS and revenues in the March quarter, respectively. Anticipating a continued improvement in bookings owing to upbeat air-travel demand, this Dallas-based carrier expects to reap profits in the remaining three quarters of 2022 as well as for the full year.

Owing to LUV’s multi-year fuel hedging program, it is insured against spikes in jet fuel prices like the current scenario.  LUV's management predicts operating revenues to increase 8-12% in the second quarter from the comparable periods level in 2019.

C.H. Robinson Worldwide CHRW delivered a positive surprise of 33.12% and 14.43% pertaining to EPS and revenues in the March quarter, respectively. The top line improved 41.8% owing to favorable truckload pricing to customers and handsome profits in ocean freight.

High freight rates drove results. In the NAST (North American Surface Transportation) segment, total revenues were $4.1 billion (up 28.1% year over year). Segmental revenues benefited from higher truckload and less-than-truckload pricing as well as increased truckload shipments.

Air Transport Services ATSG delivered a positive surprise of 24.44% and 5.92% with respect to both EPS and revenues each in the March quarter. The top line was bolstered by higher revenues from both segments, namely ACMI (aircraft, crew, maintenance & insurance) services and Cargo Aircraft Management (CAM).

Revenues from the ACMI services unit increased 34% year over year to $330 million. Revenues from the CAM segment increased 28.4% to $106.9 million while the same from other operations rose 9.4% to $102.53 million.


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