Ryder System, Inc.R reported impressive third-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Strong Fleet Management Solutions ("FMS") performance and share repurchases boosted earnings.
The better-than-expected result had a positive impact on the market. The stock has gained 2% since its earnings release on Oct. 22.
Image Source: Zacks Investment Research
Quarterly adjusted earnings per share (EPS) of $4.33 beat the Zacks Consensus Estimate of $4.17 by 3.8% and increased 21.3% year over year. Total revenues of $3.43 billion surpassed the Zacks Consensus Estimate of $3.40 billion by 1% and rose 8.3% year over year. Operating revenues of $2.76 billion increased 5.7% year over year, reflecting contractual revenue growth in FMS and Supply Chain Solutions ("SCS").
Ryder System, Inc. Price, Consensus and EPS Surprise
Ryder System, Inc. price-consensus-eps-surprise-chart | Ryder System, Inc. Quote
R's Fleet Management Performance Improves
FMS total revenues of $1.62 billion increased 10% year over year, reflecting higher fuel prices passed through to customers and increased operating revenues. Operating revenues rose 5% year over year to $1.34 billion, driven by contractual revenue growth.
The segment's earnings before taxes (EBT) increased 21% year over year to $177 million, benefiting from strategic initiatives supporting ChoiceLease performance, improved used vehicle sales and stronger rental results. EBT as a percentage of operating revenues improved to 13.2% from 11.4% a year ago.
Commercial rental power-fleet utilization increased to 77% from 70% in the year-ago quarter, despite a 12% smaller average fleet. Rental pricing improved 4% year over year.
Used vehicle pricing increased 19% for tractors and 5% for trucks year over year. Ryder sold 5,100 used vehicles during the third quarter, up from 4,900 a year ago. Used vehicle inventory declined to 7,300 units from 8,500 units in the year-ago period.
Ryder's Supply Chain Revenues Increase
SCS total revenues of $1.50 billion increased 9% year over year, primarily reflecting higher operating revenues. Operating revenues climbed 9% to $1.13 billion, driven by new business, higher volumes and pricing, partially offset by lost automotive business.
Segment EBT increased 7% year over year to $91 million, benefiting from the optimization of Ryder's omnichannel retail network and higher operating revenues. These gains were partially offset by lower automotive results and productivity challenges associated with new business ramp-ups.
The segment's EBT margin, measured against operating revenues, declined to 8.1% from 8.3% a year ago.
R's Dedicated Transportation Results Remain Mixed
Dedicated Transportation Solutions total revenues increased 6% year over year to $606 million, reflecting higher fuel revenues and subcontracted transportation costs passed through to customers.
However, operating revenues declined 1% to $455 million, reflecting a lower fleet count, partially offset by higher pricing.
Segment EBT decreased 5% year over year to $34 million, reflecting reduced operating revenues and a prior-year workers' compensation insurance benefit. Cost savings from strategic initiatives partially offset these headwinds. EBT margin declined to 7.5% from 7.8% a year ago.
Ryder's Liquidity and Cash Flow Position
Ryder exited the third quarter with cash and cash equivalents of $198 million, unchanged from the end of 2025.
Total debt, including the current portion, stood at $7.21 billion at the third-quarter end compared with $7.65 billion at 2025-end.
Net cash provided by operating activities from continuing operations totaled $1.99 billion during the first nine months of 2026, up from $1.85 billion in the corresponding year-ago period, primarily reflecting lower working capital requirements.
Free cash flow increased to $992 million from $496 million a year ago, primarily reflecting reduced capital expenditures. Ryder's adjusted return on equity improved to 18% from 17%.
R Raises 2026 Earnings Guidance
For fourth-quarter 2026, Ryder expects comparable EPS in the range of $4.25-$4.45 compared with $3.59 reported in the year-ago quarter.
For full-year 2026, management raised its comparable EPS guidance to $14.85-$15.05 from the previous projection of $14.40-$14.80. The upward revision reflects stronger-than-expected third-quarter performance and additional benefits anticipated from improving used vehicle sales and rental market conditions.
The company's adjusted free cash flow guidance was $700-$800 million.
The company's capital expenditure forecast remains unchanged at $2.4 billion, including $1.7 billion for lease vehicles and $500 million for rental vehicles. Net capital expenditures are projected at approximately $1.9 billion.
Currently, R carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Other Transportation Companies
Alaska Air Group, Inc.ALK reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%.
Wabtec CorporationWAB reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.
Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ryder System, Inc. (R) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Wabtec (WAB) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
