Ryder System (R) Spotted As Roof Leaker Today

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.

Trade-Ideas LLC identified Ryder System ( R) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ryder System as such a stock due to the following factors:

  • R has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.5 million.
  • R has traded 314,431 shares today.
  • R is trading at 2.26 times the normal volume for the stock at this time of day.
  • R crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on R:

Ryder System, Inc. provides commercial fleet management and supply chain solutions to small businesses and large enterprises worldwide. The stock currently has a dividend yield of 1.6%. R has a PE ratio of 22. Currently there are 6 analysts that rate Ryder System a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Ryder System has been 533,600 shares per day over the past 30 days. Ryder System has a market cap of $5.1 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.34 and a short float of 3.7% with 4.29 days to cover. Shares are up 0.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ryder System as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Road & Rail industry average. The net income increased by 9.7% when compared to the same quarter one year prior, going from $48.23 million to $52.92 million.
  • 35.54% is the gross profit margin for RYDER SYSTEM INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, R's net profit margin of 3.37% significantly trails the industry average.
  • Net operating cash flow has increased to $277.33 million or 17.24% when compared to the same quarter last year. Despite an increase in cash flow, RYDER SYSTEM INC's average is still marginally south of the industry average growth rate of 23.43%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • RYDER SYSTEM INC has improved earnings per share by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RYDER SYSTEM INC reported lower earnings of $4.14 versus $4.62 in the prior year. This year, the market expects an improvement in earnings ($6.50 versus $4.14).

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