Critical Analysis: Hertz Global (HTZ) and Ryder System (R)

Hertz Global (NYSE: HTZ) and Ryder System (NYSE:R) are both transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Profitability

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This table compares Hertz Global and Ryder System’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hertz Global 3.73% -13.01% -0.63%
Ryder System 10.78% 10.47% 2.15%

Institutional & Insider Ownership

93.4% of Ryder System shares are held by institutional investors. 0.3% of Hertz Global shares are held by company insiders. Comparatively, 2.3% of Ryder System shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Hertz Global has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Ryder System has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Hertz Global and Ryder System, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hertz Global 3 3 2 0 1.88
Ryder System 1 3 4 0 2.38

Hertz Global currently has a consensus target price of $15.00, indicating a potential downside of 27.43%. Ryder System has a consensus target price of $86.29, indicating a potential upside of 23.39%. Given Ryder System’s stronger consensus rating and higher possible upside, analysts clearly believe Ryder System is more favorable than Hertz Global.

Dividends

Ryder System pays an annual dividend of $2.08 per share and has a dividend yield of 3.0%. Hertz Global does not pay a dividend. Ryder System pays out 45.9% of its earnings in the form of a dividend. Ryder System has increased its dividend for 9 consecutive years.

Earnings and Valuation

This table compares Hertz Global and Ryder System’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hertz Global $8.80 billion 0.20 $327.00 million ($1.59) -13.00
Ryder System $7.33 billion 0.51 $790.55 million $4.53 15.44

Ryder System has lower revenue, but higher earnings than Hertz Global. Hertz Global is trading at a lower price-to-earnings ratio than Ryder System, indicating that it is currently the more affordable of the two stocks.

Summary

Ryder System beats Hertz Global on 15 of the 17 factors compared between the two stocks.

About Hertz Global

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty vehicle rental brands in approximately 9,700 corporate and franchisee locations throughout North America, Europe, The Caribbean, Latin America, Africa, the Middle East, Asia, Australia, and New Zealand. The Hertz Corporation is one of the largest worldwide airport general use vehicle rental companies.

About Ryder System

Ryder System, Inc. is engaged in offering transportation and supply chain management solutions. The Company operates through three segments: Fleet Management Solutions (FMS), which provides leasing, commercial rental, contract maintenance, and contract-related maintenance of trucks, tractors and trailers to customers principally in the United States, Canada and the United Kingdom; Dedicated Transportation Solutions (DTS), which provides vehicles and drivers as part of a dedicated transportation solution in the United States, and Supply Chain Solutions (SCS), which provides supply chain solutions, including distribution and transportation services in North America and Asia. Through its FMS business, the Company provides its customers with various fleet solutions. In addition, it provides its customers to purchase a selection of used trucks, tractors and trailers through its used vehicle sales program. Its customer base includes enterprises operating in various industries.

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