Old Dominion (ODFL) Gears Up for Q4 Earnings: What's in Store?
Old Dominion Freight Line ODFL is scheduled to report fourth-quarter 2023 results on Jan 31 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 3.1%.
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 $1.5 billion, implying a 1% rise from fourth-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 marginal increase from fourth-quarter 2022 levels. We expect revenues from other sources to be down 13.7% from fourth-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 1.8% dip from the prior-year quarter’s levels. We predict operating expenses to rise 1.6% from fourth-quarter 2022 actuals.
Despite lower expenses, the top-line weakness, as a result of a lackluster freight-demand scenario, is likely to have led to a deterioration in the operating ratio (operating expenses as a percentage of revenues). Our estimate for this key metric is currently pegged at 72.2%. The operating ratio was 70.6% in fourth-quarter 2022. A lower value of this metric is preferable.
The Zacks Consensus Estimate for quarterly earnings is currently pegged at $2.86 per share, reflecting a 2.1% fall from fourth-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 -1.19% and a Zacks Rank #3.
Highlights of Q3
Old Dominion's third-quarter 2023 earnings per share of $3.09 surpassed the Zacks Consensus Estimate of $2.89 but declined 8% year over year. Revenues of $1,515.27 million beat the Zacks Consensus Estimate of $1,492 million but decreased 5.5% 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 fourth-quarter 2023 earnings.
Allegiant Travel Company ALGT has an Earnings ESP of +80.07% and carries a Zacks Rank #3. ALGT will release results on Feb 5.
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 80.8%.
Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB, has an Earnings ESP of +0.85% and sports a Zacks Rank #1. WAB will release results on Feb 14. You can see the complete list of today’s Zacks #1 Rank stocks here.
WAB has an expected earnings growth rate of 20.77% for fourth-quarter 2023. WAB delivered a trailing four-quarter earnings surprise of 7.11%, on average. The Zacks Consensus Estimate for WAB’s fourth-quarter 2023 earnings has improved 3.3% over the past 90 days.
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Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
