R - Embedded Expectations Analysis - 2018 09 12
Ryder System, Inc. (R:USA) currently trades near historical lows relative toUAFRS-based (Uniform) Assets, with a 1.0x Uniform P/B, implying muted expectations for the firm. Moreover, management has concerns about their used segment, organic growth, and fleet investments
Specifically, management may be concerned about their ability to maintain strong sales numbers and segment earnings. They may also lack confidence in their strategy to reduce used vehicle exposure, and in their ability to meet their new fleet growth forecast. Additionally, they may lack confidence in their assertion that the increased demand across their sales channels will lead to pricing benefits, particularly within the used segment. Moreover, they may also have concerns about their outlook for rental demand going forward. Furthermore, they may lack confidence in their ability to meet organic growth targets in each of their segments, particularly FMS. They may also lack confidence in their ability to reduce maintenance costs, and to sustain growth in ChoiceLease sales. Additionally, they may be concerned about continued headwinds in their used segment. Finally, they may lack confidence in their ability to maintain high operating cash, and in their investments to continue growing the fleet
Ryder System is engaged in transportation and supply chain management solutions. The company's segments include: Fleet Management Solutions, which provides full service leasing and leasing with maintenance options, commercial rental, contract or transactional maintenance services, and fleet support services such as vehicle administration and fuel service; Supply Chain Solutions, which provides logistics management services, including distribution management, transportation management and other services; and Dedicated Transportation Solutions, which combines equipment, maintenance, drivers, administrative services and additional services to provide a dedicated transportation solution.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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