The reopening of the major economic activities along with an unprecedented national vaccine program for COVID-19 have helped the transportation sector gain momentum over the past couple of months. Following temporary border closures and travel restrictions implemented by governments worldwide in response to the COVIOD-19 threat, a gradual reopening of inter-country freight transportation and rising industrial demand are driving a rebound by the trucking industry from the pandemic-driven lows.
According to an American Trucking’s Association report, seasonally adjusted for-hire Truck Tonnage Index increased 7.4% in December last year, after rising 3.2% in November. Overall freight revenues are expected to increase 63.2% over the next 10 years to $1.44 trillion in 2031. In addition, the global general freight trucking market is expected to grow at a CAGR of 12.1% in 2021 to a market valuation of $727.11 billion. The ongoing mass vaccine distribution and rising demand for freight as industrial production resumes are expected to be the key drivers of the trucking industry’s growth.
Against this backdrop, the stocks of trucking concerns Old Dominion Freight Line, Inc. (ODFL), J.B. Hunt Transport Services, Inc. (JBHT), Knight-Swift Transportation Holdings, Inc. (KNX), and Landstar System, Inc. (LSTR) have immense upside potential.
Old Dominion Freight Line, Inc. (ODFL)
ODFL is a union-free motor carrier that provides regional, inter-regional and national less-than-truckload (LTL) services. The company’s LTL services include ground and air expedited transportation for time-sensitive shipments, consumer household pickup and delivery and freight delivery services throughout North America. In addition to its core LTL services, ODFL offers a broad range of other value-added services, including container drayage, truckload brokerage, supply chain consulting and warehousing.
The company has announced a general rate increase (GRI) of 4.9%, which is applicable to the rates established under the existing ODFL 559, 670, and 550 tariffs. It is expected to be effective from March 1, 2021. The rate increase should help the company to continue to provide its premium services. On February 8, ODFL announced that it has expanded its network by adding nine service centers in new and existing markets.
For the 11th consecutive year, ODFL has been ranked as the number #1 National LTL Carrier for Quality by Mastio & Company. Also, the company’s Board of Directors has declared a first-quarter dividend of $0.20 per share, payable on March 17, 2021.
ODFL’s revenue has increased 6.4% year-over-year to $1.07 billion for the fourth quarter, ended December 31, 2020. It was driven primarily by a 4.9% year-over-year increase in LTL tons and a 1.1% year-over-year increase in LTL revenue per hundredweight, which was reported at $23.10. Its LTL revenue per shipment also increased 3.7% year-over-year to $374.08. Its net income was reported to be $189.83 million, up 31.8% year-over-year, while its EPS increased 34.2% year-over-year to $1.61.
A consensus EPS estimate of $1.59 for the quarter ending March 31, 2021 represents a 43.2% improvement year-over-year. ODFL has surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $1.16 billion for the quarter ending June 30, 2021 represents a 29.8% rise from the same period last year.
The stock has gained 41.7% over the past year and closed yesterday’s trading session at $211.79.
ODFL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
ODFL has an A grade for Quality and B for Stability. We have also graded ODFL for Growth, Value, Momentum and Sentiment. Click here to access all ODFL’s ratings.
ODFL is ranked #12 of the 20 stocks in the A-rated Trucking Freight industry.
J.B. Hunt Transport Services, Inc. (JBHT)
Based in Lowell, Arkansas, JBHT is a surface transportation, delivery, and logistics company. It operates mainly through five segments — Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT). Through its subsidiaries, JBHT provides transportation and delivery services to a range of consumers throughout the United States, Canada and Mexico.
This month, Alphabet Inc.’s (GOOGL) Google and JBHT entered a multi-year strategic alliance in which using GOOGL’s Google Cloud solutions, including artificial intelligence and machine learning tools, JBHT is expected to expand its 360° platform to accelerate its digital transformation and collaborate on next-generation supply chain platform technology. The company also declared a regular quarterly dividend of $ 0.28 per common share, which is to be paid today.
JBHT has enhanced its J.B. Hunt 360° technology platform to include the availability of temperature-controlled delivery services within its Shipper 360, a self-service platform where shippers are able to compare rates, schedule shipments and create alerts. Also, JBHT’s subsidiary, J.B. Hunt Transport, Inc., acquired the assets of Mass Movement, Inc. last November.
JBHT’s operating revenues for the fourth quarter, ended December 31, 2021 increased 11.7% year-over-year to $2.74 billion. The company’s revenue from the DCS segment increased 2.8% year-over-year to $568.35 million, and its revenue from the ICS segment increased 56% year-over-year to $587.28 million. Its net earnings have increased 6.4% year-over-year, while its EPS has increased 6.7% year-over-year to $1.44.
A consensus EPS estimate of $1.25 for the quarter ending March 31, 2021 represents a 27.6% improvement year-over-year. Moreover, JBHT has surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $2.56 billion for the quarter ending June 30, 2021 represents a 19.3% rise from the same period last year.
The stock has gained 32.9% over the past year and closed yesterday’s trading session at $146.90.
JBHT has a B grade for Quality and Stability. We have also graded the stock for Growth, Value, Momentum and Sentiment. Get all JBHT’s ratings here.
JBHT is ranked #13 in the same industry.
Knight-Swift Transportation Holdings, Inc. (KNX)
Founded in 1989, KNX provides truckload services in North America. The company also provides rail intermodal and non-asset-based freight brokerage and logistics management services. The company operates primarily through three segments–Trucking, Logistics, and Intermodal. KNX has an extensive fleet of roughly 19,000 tractors and 58,000 trailers.
KNX’s Board of Directors has declared the company’s quarterly cash dividend of $0.08 per share of common stock, which is expected to be paid on March 26 The company announced on February 1, that it has acquired a majority ownership position in a software company named Eleos. According to Dave Jackson, KNX CEO, “The Eleos team and their software platform have been invaluable in creating a driver digital experience that enables safety, productivity, and low driver turnover”.
KNX’s total revenue for the fourth quarter, ended December 31, 2020, has increased by 6.8% year-over-year to $1.28 billion. In its trucking segment, the company’s revenue, excluding fuel surcharge and intersegment transactions, increased 9.2% year-over-year to $940.91 million. Its net income has increased by 111% year-over-year to $142.33 million. And its adjusted EPS, reported at $0.94, has increased by 70.9 % year-over-year.
A consensus EPS estimate of $0.72 for the quarter ending March 31 represents a 63.6% improvement year-over-year. Also, KNX has surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $5.13 billion for the fiscal 2021 represents a 9.9% rise from the year ago period.
The stock has gained 8.5% over the past year and closed yesterday’s trading session at $43.79.
KNX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock also has a B grade for Growth. We have graded KNX for Momentum, Sentiment, Value, Stability, and Quality also. Click here to access all KNX’s ratings.
KNX is ranked #11 in the same industry.
Landstar System, Inc. (LSTR)
LSTR is a worldwide, asset-light provider of integrated transportation management solutions that delivers safe, specialized transportation services to a broad range of customers. It utilizes a network of agents, third-party capacity owners and employees. The company operate mainly through two segments—Transportation Logistics and Insurance.
LSTR’s Board of Directors declared a special one-time cash dividend of $2.00 per share, which was paid on January 22. Regarding the company’s outlook, CEO Jim Gattoni said, “I anticipate demand for substitute line haul services in the 2021 first quarter will return to the still very strong levels we experienced throughout September and October before the steep spike in demand that took place during the holiday peak season”.
The stock has gained 40.7% over the past year and closed yesterday’s trading session at $157.02. The company’s total revenue for the fourth quarter, ended December 26, 2020, has increased by 30.3% year-over-year to $1.296 billion. Its revenue from total truck transportation increased 31.8% year-over-year to $1.20 billion. Its net income has increased more than 30% year-over-year to $65.07 million, while its EPS was reported to be $1.70, up 33.9%.
A consensus EPS estimate of $1.60 for the quarter ending March 31, 2021 represents a 53.8% improvement year-over-year. The consensus revenue estimate of $1.16 billion for the quarter ending June 30, 2021 represents a 47% rise from the same period last year. The stock has gained 40.7% over the past year and closed yesterday’s trading session at $157.02.
LSTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
LSTR also has a B grade for Growth and Quality. We have also graded LSTR for Momentum, Sentiment, Value, and Stability. Click here to access all LSTR’s ratings.
LSTR is ranked #8 in the same industry.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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ODFL shares were trading at $216.35 per share on Friday afternoon, up $4.56 (+2.15%). Year-to-date, ODFL has gained 10.85%, versus a 4.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
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