Why Is Old Dominion (ODFL) Up 6.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Old Dominion Freight Line (ODFL). Shares have added about 6.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Old Dominion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Earnings Beat at Old Dominion in Q2
Old Dominion Freight Line’s earnings per share of $2.31 outpaced the Zacks Consensus Estimate by 14 cents. Moreover, the bottom line surged 84.8% year over year. The upside was driven by a vast improvement in the operating ratio on the back of higher revenues.
Revenues of $1,319.4 million also surpassed the Zacks Consensus Estimate of $1,240.8 million and increased 47.2% year over year as well, led by an 28.1% increase in LTL tons and a 14.9% uptick in LTL revenue per hundredweight.
Other Details
In the quarter under review, LTL weight per shipment fell 4%, while LTL revenue per shipment rose 10.3%. Both LTL shipments and LTL shipments per day were up 33.5% year over year.
The company’s major revenue-generating segment LTL services logged a total of $1,299.8 million, up 47% year over year. Revenues from other services rallied 61.8% to $19.6 million.
Total operating expenses rose 36.8% to $953.4 million, mainly due to the 32.7% rise in costs pertaining to salaries, wages & benefits and 82.5% escalation in operating supplies & expenses.
Moreover, the operating ratio improved 550 basis points to 72.3%. Notably, lower the value of this metric, the better.
Old Dominion exited the quarter with cash and cash equivalents worth $484.2 million compared with $401.43 million at the end of 2020. Capital expenditures incurred in the reported quarter were $155.1 million. Old Dominion expects a capex of $605 million for 2021 (in-line with its previous expectation). Of the total, $275 million is anticipated to be invested in real estate and service-center expansion. The company expects to spend $290 million and $40 million on tractors/trailers and information technology and other assets, respectively.
During the second quarter, Old Dominion rewarded its shareholders with $63.2 million of capital.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 8% due to these changes.
VGM Scores
Currently, Old Dominion has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Old Dominion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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