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Bull Of The Day: Radiant Logistics (RLGT)

Brian Bolan

Radiant Logistics (RLGT) rallied on Friday with volume that was approaching twice the normal amount.  Before the close I looked back at the last five trading days and I saw this stock up ~13% for the week, but that should be no surprise for a stock that has a Zacks Rank #1 (Strong Buy) and a Growth Style Score of ‘A.’  Today, RLGT is the Bull of the Day.

Low Priced Mover

I recently published a strategy piece that talks about using a wider net to catch more winners.  You can read more about that here: https://www.zacks.com/stock/news/255761/a-wider-net-catches-more-winners?cid=EC-EFA-255761-FA1-A  - and I bring that up because this stock would fall in that net.  It is a low priced stock that has the growth and the Zacks Rank that we are looking for.

Description

Radiant Logistics, Inc. operates as a third-party logistics company, providing multi-modal transportation and logistics services. 

Earnings

The earnings history for RLGT isn’t the greatest I have ever seen, but I love what the most recent report looked like.  The company reported EPS of $0.10 when the Zacks Consensus Estimate was calling for only a penny.  That 9 cent beat was good for a 900% positive earnings surprise.

The topline came in ahead of expectations by $9M or about 5% ahead of expectations.  The end result of such a solid beat was the stock launching higher by 19% in the session following the release.

Estimates

I was trying to think of a good way of explaining what it looks like when you see the Zacks Consensus Estimate move from a gain to a loss to a massive gain.  The best way I came up with is to show you what I see:

Now movements like this come after a big beat, but you can see that there was some negativity around this stock in February but that has all changed.

Thing is, that near term negativity wasn’t present for the longer term.  The 2018 Zacks Consensus Estimate was $0.14 in January and it kicked higher to $0.15 in February.  By the end of March the number lifted to $0.20 following the early in the month earnings release.  The 2018 Zacks Consensus Estimate stands at $0.20

Tailwinds

The trucking industry is rebounding.  February and March both showed some solid growth of Class 8 truck orders.  March saw 41% year over year growth and from the chart below you can see a good looking trend.

When you have the backbone of the transportation market growing like this it signals that there is some pretty healthy demand in the sector.  A company like RLGT will probably benefit from this trend.

Valuation

The valuation for RLGT is pretty good once you get passed the forward PE that shows the stock trading at a small premium to the industry average.  RLGT has a forward PE of 23x and that is just ahead of the 18x industry average.  The price to book multiple of 2.1x is below where most value investors set a limit of about 3x.  the industry average of P/B multiple is an astronomical 35x – but that could be a case of bad data.  The price to sales multiple for RLGT is 0.4x while the industry average is 1x.  To me, this is a great valuation for a stock that looks to have excellent earnings growth along with some strong tailwinds.

 

Radiant Logistics, Inc. Price and Consensus

Radiant Logistics, Inc. Price and Consensus | Radiant Logistics, Inc. Quote

 


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