Have you been paying attention to shares of Universal Logistics (ULH)? Shares have been on the move with the stock up 28.1% over the past month. The stock hit a new 52-week high of $34.36 in the previous session. Universal Logistics has gained 79.9% since the start of the year compared to the -10.6% move for the Zacks Transportation sector and the -11.2% return for the Zacks Transportation - Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 28, 2022, Universal Truckload reported EPS of $1.69 versus consensus estimate of $1.16.
For the current fiscal year, Universal Truckload is expected to post earnings of $5.80 per share on $2.01 billion in revenues. This represents an 80.12% change in EPS on a 15% change in revenues. For the next fiscal year, the company is expected to earn $5.20 per share on $1.9 billion in revenues. This represents a year-over-year change of -10.34% and -5.59%, respectively.
Universal Truckload may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Universal Truckload has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 5.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.4X. On a trailing cash flow basis, the stock currently trades at 5.9X versus its peer group's average of 7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Universal Truckload currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Universal Truckload meets the list of requirements. Thus, it seems as though Universal Truckload shares could have potential in the weeks and months to come.
How Does ULH Stack Up to the Competition?
Shares of ULH have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Hub Group, Inc. (HUBG). HUBG has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Hub Group, Inc. beat our consensus estimate by 76.71%, and for the current fiscal year, HUBG is expected to post earnings of $9.48 per share on revenue of $5.4 billion.
Shares of Hub Group, Inc. have gained 6.9% over the past month, and currently trade at a forward P/E of 7.95X and a P/CF of 8.63X.
The Transportation - Services industry is in the top 11% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ULH and HUBG, even beyond their own solid fundamental situation.
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