Old Dominion (ODFL) Gears Up for Q3 Earnings: What's in Store?
Old Dominion Freight Line ODFL is scheduled to report third-quarter 2023 results on Oct 25, before market open.
The company has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed once, the average beat being 3.9%.
Given this backdrop, let’s check out the factors that might have influenced Old Dominion’s performance in the quarter under review.
We expect Old Dominion’s performance to have been hurt by soft revenues due to weak freight demand. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.49 billion, implying a 7% decline from third-quarter 2022 actuals.
Old Dominion Freight Line, Inc. Price and EPS Surprise
Old Dominion Freight Line, Inc. price-eps-surprise | Old Dominion Freight Line, Inc. Quote
The bulk of revenues is generated by the Less-Than-Truckload or LTL Service unit. Our estimate for segmental revenues indicates a 10.8% decrease from third-quarter 2022 levels. We expect revenues from other sources to be down 16.7% from third-quarter 2022 actuals.
On the flip side, lower expenses led by the company’s cost-control initiatives are likely to have aided the bottom-line performance. Due to cost-control exercises, our estimate for salaries, wages and benefits hints at a 6.5% dip from the prior-year quarter’s levels. We predict operating expenses to fall 6.1% from third-quarter 2022 actuals.
Despite lower expenses, the top-line weakness, as a result of lackluster freight-demand scenario, is likely to have led to a deterioration in operating ratio (operating expenses as a percentage of revenues). Our estimate for this key metric is currently pegged at 72.8% compared with 69.1% reported in third-quarter 2022. A lower value of this metric is preferable. The Zacks Consensus Estimate for quarterly earnings is currently pegged at $2.89 per share, reflecting a 14% fall from third-quarter 2022 actuals.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for ODFL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Old Dominion has an Earnings ESP of -0.34% and a Zacks Rank #2.
Highlights of Q2
ODFL's second-quarter 2023 quarterly earnings per share of $2.65 surpassed the Zacks Consensus Estimate of $2.63 but declined 19.7% year over year. Results were hurt by softness pertaining to the domestic economy, which resulted in a challenging operating environment. Revenues of $1,413.2 million lagged the Zacks Consensus Estimate of $1,445.6 million and decreased 15.2% year over year.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
Golar LNG Limited GLNG currently has an Earnings ESP of +18.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
GLNG is scheduled to release third-quarter 2023 results on Nov 21. Golar LNG's efforts to reward its shareholders through share buybacks look encouraging.
Copa Holdings, S.A. CPA presently has an Earnings ESP of +4.60% and a Zacks Rank #3. CPA is set to post third-quarter 2023 numbers on Nov 15.
Upbeat air-travel demand has been aiding Copa Holdings' revenues.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Golar LNG Limited (GLNG) : Free Stock Analysis Report
