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Bear of the Day: ArcBest Corp (ARCB)

Brian Bolan

May was a tough month for stocks across the board.  It was even worse to stocks that missed earnings in that month and that is just what happened to ArcBest Corp (ARCB).  Following the earnings miss, the stock has fallen to a Zacks Rank #5 (Strong Sell) and is now the Bear of the Day.

Description

ArcBest Corporation provides freight transportation services and solutions. The company's Freight Transportation segment offers transportation of general commodities; motor carrier freight transportation services; business-to-business air transportation services; ocean transport services; global customizable supply chain solutions and integrated warehousing services. Its Premium Logistics & Expedited Freight Services segment provides expedited freight transportation services to commercial and government customers; premium logistics services; and domestic and international freight transportation with air, ocean, and ground service. ArcBest Corporation, formerly known as Arkansas Best Corporation, is headquartered in Fort Smith, Arkansas.

Earnings History

Back on May 2, the company reported earnings that were below expectations.  The total sales of $711.8M was still an increase of 1.7% on an annual basis, but still below the $724M consensus estimate.  

It is important to note that while the muiss of 13 cents was a 43% negative earnings surprise, it was the first miss over the last four quarters.

Estimate Revisions

Following the miss, the estimates for 2019 dropped.  The Zacks Consensus Estimate moved from $3.69 to $3.38 over the last 60 days.  Similarly, the  Zacks Consensus Estimate for next year slipped from $3.84 to $3.57 over the same time horizon.

Research Support

A couple of weeks ago I saw a research note come out suggested that there would not be a freight recession. That same note highlighted ARCB among others as a solid investment oppotunity as most of the names in the group were trading below historic multiples.

A call like that takes some guts as the broader market continues to worry about what a trade war might do to transportation names. 

Chart

ArcBest Corporation Price and Consensus

ArcBest Corporation Price and Consensus

ArcBest Corporation price-consensus-chart | ArcBest Corporation Quote

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