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Old Dominion (ODFL) to Report Q4 Earnings: What's in Store?

Zacks Equity Research

Old Dominion Freight Line ODFL, which joined the coveted S&P 500 Index on Dec 9, 2019, is scheduled to report fourth-quarter 2019 results on Feb 6, before market open.

The Zacks Consensus Estimate for fourth-quarter 2019 earnings has been revised downward 4.8% in the past 60 days. Given this backdrop, let’s delve into the factors that might have influenced the company’s performance in the quarter.

Old Dominion’s quarterly performance is likely to have been dented by a decline in LTL (Less-Than-Truckload) tonnage due to a soft freight environment. The Zacks Consensus Estimate for fourth-quarter LTL tonnage per day hints at a 2% decline from the figure reported for the July-September period. LTL shipments are also likely to have declined during the December-end period due to soft freight demand.

Another key metric — operating ratio (operating expenses as a percentage of revenues) — is likely to have suffered mainly due to lackluster revenues. The Zacks Consensus Estimate for fourth-quarter operating ratio is pegged at 81%, higher than the 79% reported for the September-end quarter. Notably, lower the value the better. High capital expenditures are also likely to have eroded the bottom line for the soon-to-be-reported quarter.

However, LTL revenue per hundredweight is likely to have increased in the fourth quarter partly owing to favorable pricing in the October-December period. The Zacks Consensus Estimate for fourth-quarter LTL revenue per hundredweight hints at an almost 1% improvement from the figure reported for the third quarter.

Old Dominion Freight Line, Inc. Price and EPS Surprise

 

Old Dominion Freight Line, Inc. Price and EPS Surprise

Old Dominion Freight Line, Inc. price-eps-surprise | Old Dominion Freight Line, Inc. Quote

What Does the Zacks Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Old Dominion in the fourth quarter of 2019. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Old Dominion has an Earnings ESP of -1.87% as the Most Accurate Estimate is pegged at $1.75, lower than the Zacks Consensus Estimate of $1.78. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Old Dominion carries a Zacks Rank #4, currently.

Highlights of Q3 Earnings

In the last reported quarter, Old Dominion’s earnings of $2.05 per share missed the Zacks Consensus Estimate of $2.11. Moreover, the bottom line fell 3.3% year over year. Quarterly revenues of $1,048.5 million also fell short of the consensus mark of $1,059.2 million and edged down nearly 1%, year over year.

Stocks to Consider

Investors may consider Spirit Airlines SAVE, Merck & Co. MRK,and Frontline Ltd. FRO as these stocks possess the right combination of elements to come up with earnings beats in their next releases.

Spirit Airlines has an Earnings ESP of +3.24% and currently holds a Zacks Rank of 2. The company will release fourth-quarter earnings numbers on Feb 5.

Merck has an Earnings ESP of +1.05% and currently carries a Zacks Rank of 3. The company will release quarterly numbers on Feb 5.

Frontline is a Zacks #1 Ranked stock and has an Earnings ESP of +41.18%. The company is slated to report fourth-quarter figures on Feb 28.

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