Will This Downgrade Hurt Ryder System (R) Stock Today?

Story updated at 9:55 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Ryder System (R) was downgraded to "hold" from "buy" by Stifel Nicolaus Thursday.

Ryder System fell 0.8% to $79.95 in morning trading.

The downgrade was due to a valuation call according to the firm's analysts.

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Separately, TheStreet Ratings team rates RYDER SYSTEM INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate RYDER SYSTEM INC (R) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, attractive valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.89% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, R should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • RYDER SYSTEM INC has improved earnings per share by 15.9% 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 two years. We feel that this trend should continue. During the past fiscal year, RYDER SYSTEM INC increased its bottom line by earning $4.62 versus $3.92 in the prior year. This year, the market expects an improvement in earnings ($5.44 versus $4.62).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the Road & Rail industry average, but is less than that of the S&P 500. The net income increased by 20.0% when compared to the same quarter one year prior, going from $53.84 million to $64.61 million.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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