Buy Rider Systems For Cheap Valuations, Dividends And Cost Cutting Measures

A leader in trucking transportation and logistics, Ryder Systems (R) topped earnings and EPS estimates, but missed revenue targets. It is yet again an example of an industrial that has missed the sales estimate, but made higher than expected profits. This solidifies Qineqt's stance that industrials this year are trimming their cost structures, but have not found enough sales coming their way to provide impressive results on the earnings release. Earlier on, Harley-Davidson (HOG), the manufacturer of stylish motorbikes also missed revenue estimates, but exceeded EPS expectations. Similarly, Caterpillar (CAT), the giant equipment manufacturer, Norfolk Southern (NSC), U.S.-based railroad, Chicago Bridge & Iron (CBI), the engineering & construction company, and several other manufacturers missed sales expectations but exceeded EPS estimates. The positive news for Ryder investors was that the company raised its full year outlook to $3.93-$3.98, from the prior guidance of $3.75-$3.9.

Despite a weak economy, the company was able to deliver more than market expectations due to cost restructuring. Maintenance costs were also low, as the company has a young fleet of trucks. The stock was upgraded by Sun Trust's Robin Humphrey some weeks back. The analyst upgraded the stock, as the stock is trading at very cheap and low-end multiples. According to him, the stock is trading below its fair value, as the market perceives that the overall transportation industry is on a decline. Also, Ryder is a member of the Dow Jones Transportation Index, which is on a decline as well. Also, Ryder, for no reason, has underperformed both the DJTA and the S&P 500. Read more