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Old Dominion Freight Line, Inc. (NASDAQ:ODFL): Immense Growth Potential?

Frank Brewer

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In December 2018, Old Dominion Freight Line, Inc. (NASDAQ:ODFL) released its latest earnings announcement, which suggested that the business benefited from a strong tailwind, leading to a double-digit earnings growth of 31%. Below, I’ve presented key growth figures on how market analysts perceive Old Dominion Freight Line’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Old Dominion Freight Line

Analysts’ outlook for this coming year seems rather subdued, with earnings increasing by a single digit 6.7%. The growth outlook in the following year seems much more positive with rates arriving at double digit 13% compared to today’s earnings, and finally hitting US$727m by 2022.

NASDAQGS:ODFL Future Profit February 11th 19

Even though it is useful to understand the growth year by year relative to today’s figure, it may be more insightful to determine the rate at which the earnings are growing every year, on average. The pro of this method is that we can get a bigger picture of the direction of Old Dominion Freight Line’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.1%. This means, we can expect Old Dominion Freight Line will grow its earnings by 6.1% every year for the next couple of years.

Next Steps:

For Old Dominion Freight Line, I’ve compiled three pertinent factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ODFL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ODFL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ODFL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.