Have you been paying attention to shares of Heartland Express (HTLD)? Shares have been on the move with the stock up 12.7% over the past month. The stock hit a new 52-week high of $22.29 in the previous session. Heartland Express has gained 21.6% since the start of the year compared to the 15.5% move for the Zacks Transportation sector and the 27.3% return for the Zacks Transportation - Truck industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 18, 2019, Heartland Express reported EPS of $0.27 versus consensus estimate of $0.25 while it missed the consensus revenue estimate by 3.63%.
For the current fiscal year, Heartland Express is expected to post earnings of $1 per share on $571.93 million in revenues. This represents a 13.64% change in EPS on a -6.37% change in revenues. For the next fiscal year, the company is expected to earn $0.91 per share on $555.3 million in revenues. This represents a year-over-year change of -8.7% and -2.91%, respectively.
Heartland Express may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Heartland Express has a Value Score of C. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.5X versus its peer group's average of 6.8X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Heartland Express currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Heartland Express fits the bill. Thus, it seems as though Heartland Express shares could have a bit more room to run in the near term.
How Does Heartland Express Stack Up to the Competition?
Shares of Heartland Express have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Marten Transport (MRTN), GATX (GATX), and XPO Logistics (XPO), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Heartland Express. Still, the fundamentals for Heartland Express are promising, and it still has potential despite being at a 52-week high.
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