Ryder System R is facing significant freight market challenges. Escalating operating expenses are adversely affecting the company’s bottom line, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

Ryder: Key Risks to Watch

Southward Earnings Estimate Revision:The Zacks Consensus Estimate for 2025 earnings has been revised 1.14% downward over the past 60 days. The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

Dim Price Performance: The company’s price trend reveals that its shares have lost 5.9% over the past month compared with the industry’s 7.7% decline.

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Weak Zacks Rank: Ryder currently carries a Zacks Rank #4 (Sell).

Headwinds: R’s financial stability is challenged by the increased operating expenses and weak liquidity. In the third quarter of 2024, the total operating expenses rose 9% year over year. This surge in operating expenses was primarily driven by escalated costs of services and selling, general and administrative expenses, adversely impacting the company’s bottom line.

In the third quarter of 2024, the cost of services accounting for 59.5% of the total operating expenses rose 16% year over year and selling, general and administrative expenses increased 6.1% year over year.

Moreover, the company exited the September-end quarter with a current ratio (a measure of liquidity) of 0.74. A current ratio of less than 1 is not desirable as it does not indicate that the company holds sufficient cash to meet its short-term obligations.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider American Airlines AAL and SkyWest SKYW.

American Airlines currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

AAL has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 124.4%. Shares of AAL have risen 29.8% in the past year.

SkyWest too currently sports a Zacks Rank #1. SKYW has an expected earnings growth rate of 3.02% for the current year.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.12%. Shares of SKYW have climbed 96.3% in the past year.

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

American Airlines Group Inc. (AAL) : Free Stock Analysis Report

SkyWest, Inc. (SKYW) : Free Stock Analysis Report

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