NEW YORK — Shares of Ryder System Inc. lost more than any stock in the Standard & Poor's 500 index on Friday as investors reacted to the truck leasing company's lower earnings forecast for the second quarter and full year.
The Miami company late Thursday cut its expectations for both periods mostly due to reduced commercial truck rental demand. Ryder has over 25,000 late-model vehicles for rent including vans and trucks.
The slowdown highlights the still-fragile state of the U.S. economy, because companies don't need as many trucks to haul freight. The housing and construction markets — major customers of truck rentals — remain weak. The main trade group for the U.S. trucking industry said Tuesday that tonnage — the most important metric of demand in the sector — fell for two straight months in April and May. Consecutive declines show that the economy is slowing, according to Bob Costello, chief economist for the American Trucking Association.
Ryder fell $5.31, or 13 percent, to close at $35.44. The stock traded as low as $35 in the session.
Adding to its challenges, Ryder also expects unusually high medical benefit costs to cut earnings by about 5 cents per share in the second quarter. For that period, it now anticipates earnings between 90 cents and 95 cents per share, down from a previous forecast between $1.07 and $1.12. Ryder expects the slower demand environment will continue through the end of the year.
For all of 2012, the company expects to earn between $3.65 and $3.85 per share, down from a prior range of $4.02 to $4.12. Analysts currently predict $3.86 per share.
Several analysts cut their earnings predictions for Ryder but kept their "Buy" investment ratings on the stock, saying it's still a good value even with lower expectations. Stifel Nicolaus analyst David Ross applauded the company's efforts to act quickly and cut its fleet to better match demand, while R.W. Baird analyst Benjamin Harford noted that Ryder's other business segments should make up some of the commercial rental shortfall.
Kevin Jones of The Trucker staff can be reached for comment at email@example.com.
Find more news and analysis from The Trucker, and share your thoughts, on Facebook.