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Old Dominion (ODFL) Down 9% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Old Dominion Freight Line (ODFL). Shares have lost about 9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Old Dominion due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Old Dominion in Q1

Old Dominion Freight Line delivered fourth-quarter 2019 earnings of $1.64 per share, surpassing the Zacks Consensus Estimate of $1.58. Moreover, the bottom line improved 23.3% year over year. Meanwhile, quarterly revenues of $991 million fell short of the consensus mark of $998 million but increased 7.1% on a year-over-year basis. Top-line growth was primarily driven by a 9.6% increase in less-than-truckload (LTL) revenue per hundredweight.

In the quarter under review, LTL revenue per hundredweight was up 9.6% excluding fuel surcharges. Also, LTL shipments inched up 1.1%. However, LTL weight per shipment declined 4%. Additionally, operating ratio (operating expenses as a percentage of revenues) improved 190 basis points (bps) to 82% on the back of greater efficiencies.

Old Dominion exited the first quarter with cash and cash equivalents of $280.6million. Capital expenditures in the quarter totaled $70.7 million.

The company expects capital expenditures to be $480 million in 2019 (previous estimate was $490 million). Of the total amount, $220 million is anticipated to be spent on real estate and service center expansion while approximately $165 million and $95 million are estimated to be spent on tractors and trailers, and technology and other assets, respectively. During the quarter, the company rewarded its shareholders with $44.4 million through $13.8 million in dividends and $30.6 million in buybacks.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

Currently, Old Dominion has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Old Dominion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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