NEW YORK ( TheStreet) -- Ryder System Inc (NYSE: R) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally poor debt management and poor profit margins. Highlights from the ratings report include:
- R's revenue growth has slightly outpaced the industry average of 16.0%. Since the same quarter one year prior, revenues rose by 17.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RYDER SYSTEM INC has improved earnings per share by 36.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RYDER SYSTEM INC increased its bottom line by earning $2.38 versus $1.62 in the prior year. This year, the market expects an improvement in earnings ($3.41 versus $2.38).
- Net operating cash flow has declined marginally to $254.67 million or 1.75% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 2.22 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, R maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.