Werner (WERN) Down 9.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Werner Enterprises (WERN). Shares have lost about 9.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Werner due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Werner's Q4 Earnings Lag Estimates
Quarterly earnings per share of 39 cents lagged the Zacks Consensus Estimate of 44 cents and declined 61% on a year-over-year basis. Total revenues of $821.9 million outperformed the Zacks Consensus Estimate of $811.1 million. However, the top line dipped 5% on a year-over-year basisdue to a $54.7 million decrease in Truckload Transportation Services (TTS) revenues, partially offset by Logistics revenue growth of $13.5 million, which includes the ReedTMS acquisition.
Adjusted operating income of $39.2 million fell 56% year over year. Adjusted operating margin of 4.8% declined 560 basis points from the year-ago reported quarter.
Segmental Results
Revenues in the TTS segment fell 9% on a year-over-year basis to $580.09 million due to lower fuel surcharge revenues. Adjusted operating income of $37.2 million fell 55% year over year owing to a lower rate per mile in One-Way Truckload, smaller overall fleet size, and lower gains on the sale of property and equipment. Adjusted operating margin decreased 670 basis points to 6.4%.
Logistics’ revenues totaled $226.96 million, up 6% year over year. Adjusted operating income of $3.0 million fell 62%. Adjusted operating margin of 1.3% fell 250 basis points.
Liquidity
As of Dec 31, 2023, Werner had cash and cash equivalents of $61.72 million compared with $42.75 million at the third-quarter end. Long-term debt (net of current portion) totaled $646.25 million at the end of the fourth quarter compared with $686.25 million at the prior-quarter end.
The company generated $118.3 million of cash from operations in fourth-quarter 2023. Net capital expenditure amounted to $34.5 million.
In the quarter , Werner did not repurchase any shares. As of Dec 31, 2023, WERN had 2.3 million shares available under its share repurchase authorization.
Outlook
For 2024, Werner anticipates TTS truck growth between (3%) and breakeven.
Net capital expenditure is estimated to be in the range of $260-$310 million. Under the TTS guidance, WERN projects dedicated revenues per truck per week growth to rise from breakeven to 3% in 2024.
One-way Truckload revenues per total mile are predicted to decline 6-3%. Werner expects the average truck age to be 2.1 years for 2024, while the trailer age is forecasted to be five years.
Full-year 2024 tax rate is anticipated to be in the range of 24.5%-25.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -23.53% due to these changes.
VGM Scores
At this time, Werner has a nice Growth Score of B, a grade with the same score on the momentum front. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Werner has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Werner belongs to the Zacks Transportation - Truck industry. Another stock from the same industry, Old Dominion Freight Line (ODFL), has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Old Dominion reported revenues of $1.5 billion in the last reported quarter, representing a year-over-year change of +0.3%. EPS of $2.94 for the same period compares with $2.92 a year ago.
For the current quarter, Old Dominion is expected to post earnings of $2.68 per share, indicating a change of +3.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.6% over the last 30 days.
Old Dominion has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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