Price to Earnings is a useful way to value profitable companies like Ryder because it links what investors pay today to the earnings the business is already generating. In general, faster growth and lower risk can justify a higher PE ratio, while slower growth and higher risk usually mean the multiple should sit lower.

Ryder currently trades on about 15.47x earnings, which is well below the Transportation industry average of roughly 31.12x and also below the broader peer group average of around 43.69x. On the surface, that discount suggests the market is more cautious about Ryder’s growth durability or cycle risk than it is about many peers.

Simply Wall St’s Fair Ratio for Ryder is 14.87x, a proprietary estimate of what a reasonable PE multiple should be given the company’s earnings growth profile, profitability, size, industry and specific risks. This makes it more tailored than a simple comparison with peers or the sector, which can be skewed by very high growth or very risky companies. With Ryder’s actual PE of 15.47x sitting just above the 14.87x Fair Ratio, the stock appears broadly in line with its fundamentals on this measure.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1464 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy way to connect your view of Ryder System’s story with a concrete forecast and Fair Value on Simply Wall St’s Community page, where millions of investors share their perspectives. A Narrative is your story behind the numbers, explaining why you think Ryder’s future revenue, earnings and margins will look a certain way, then translating that into a Fair Value you can compare to today’s share price to help you decide whether to buy, hold or sell. Narratives are powerful because they update dynamically when new information like news, earnings or guidance arrives. This means your Fair Value and conviction can adapt as the facts change rather than staying frozen in time. For example, one investor might build a Narrative around accelerating reshoring, higher margins and successful buybacks that supports a Fair Value closer to about $215 per share. A more cautious investor might stress freight cyclicality and competition, landing closer to $183. Narratives make those different viewpoints obvious, comparable and actionable.

Do you think there’s more to the story for Ryder System? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include R.

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