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What: Shares of Ryder System (NYS: R) sank 13% on Friday after the truck leasing company slashed its current-quarter and full-year earnings forecast.
So what: Ryder shares have been crushed in recent months on worries over weak global business activity, and today's second-quarter guidance cut -- management sees EPS of $0.90-$0.95 versus its prior view of $1.07-$1.12 -- naturally reinforces those fears. Management cited soft commercial truck rental demand and higher medical benefit costs as the main reasons for the disappointing outlook, forcing several analysts to lower their growth expectations on the stock.
Now what: Looking further ahead, management now sees full-year 2012 EPS of $3.65-$3.85, down significantly from its earlier view of $4.02-$4.12. "We are responding with timely and appropriate business adjustments and cost management initiatives to address economic headwinds that are expected to continue through the remainder of the year," Chairman and CEO Greg Swienton cautioned. Of course, when you couple management's swift efforts to reduce its commercial fleet with the likelihood that Ryder's leasing segment should be able to offset some of that decline, today's share-price pullback seems a tad overdone.
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The article Why Ryder System Shares Plunged originally appeared on Fool.com.
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