Dividends, Buyback Aid Schneider (SNDR) Amid Segmental Weakness
Schneider National, Inc. SNDR is benefiting from a decrease in operating expenses and shareholder-friendly initiatives adopted by the company. Shares of Schneider have gained 27.8% so far this year, outperforming the 3.8% surge of the industry it belongs to.
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SNDR recently reported second-quarter 2023 earnings per share (EPS) of 45 cents, which beat the Zacks Consensus Estimate by a penny but declined 38% from the year-ago quarter’s levels. Operating revenues of $1,346.5 million lagged the Zacks Consensus Estimate of $1,459 million and fell 23% year over year. Revenues (excluding fuel surcharge) decreased 20% to $1,190.9 million.
How is Schneider Doing?
We are impressed with the company's efforts to reward shareholders even in the current uncertain times. To this end, in February 2023, the company's board approved a 12.5% hike in its quarterly cash dividend to 9 cents per share on its Class A and Class B common stock. Such moves instill investors’ confidence in the stock. In February 2023, SNDR announced the approval of a $150 million stock repurchase program. As of Jun 30, 2023, SNDR has repurchased shares worth $36.1 million under the program and paid $31.8 million in the form of dividends to shareholders year to date.
Fall in operating expenses, mainly due to low purchased transportation costs (plunged 31.7% in second-quarter 2023) and other general expenses (declined 25.4%), might have aided bottom-line growth. Total operating expenses decreased 20.8% year over year in second-quarter 2023 to $1,242.7 million.
On the flip side, Schneider's second-quarter 2023 revenues were unfavorably impacted by weakness across all segments. Truckload revenues (excluding fuel surcharge) for the second quarter of 2023 fell 7% year over year owing to lower network prices driven by market conditions. Intermodal revenues (excluding fuel surcharge) fell 22% year over year due to lower volume and revenue per order. Logistics revenues (excluding fuel surcharge) for the second quarter of 2023 fell 34% year over year, owing to a decline in revenue per order impacted by lower spot prices and a 10% decrease in brokerage volume.
Schneider’s board has decreased its adjusted EPS guidance for 2023 in the range of $1.75 - $1.90 (prior view: $2.00 - $2.20). The decreased outlook might have been due to the currently challenged freight environment.
Zacks Rank and Stocks to Consider
Currently, Schneider carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are United Airlines (UAL) and SkyWest, Inc. (SKYW). United Airlines presently sports a Zacks Rank #1 (Strong Buy), while SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 21.44%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 18.9% over the past 90 days. Shares of UAL have soared 34.5% year to date.
SkyWest's fleet-modernization efforts are commendable.Fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a fall in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 144.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.
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