Why Is Schneider National (SNDR) Down 22.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Schneider National (SNDR). Shares have lost about 22.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Schneider National due for a breakout? 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 drivers.
Earnings Miss at Schneider National in Q4
Schneider National’s earnings (excluding 6 cents from non-recurring items) of 37 cents per share missed the Zacks Consensus Estimate by 2 cents. The bottom line also declined 24.5% year over year. Also, operating revenues dipped 12.5% to $1,156.3 million, lagging the Zacks Consensus Estimate of $1,224.6 million. Moreover, revenues (excluding fuel surcharge) decreased 12% to $1,040.5 million. Results were hampered by lower volumes and unfavorable pricing.
Moreover, income from operations (on a reported basis) plunged 34.1% to $78.1 million in the fourth quarter, mainly due to the $13.3-million charges regarding the first-to-final mile shutdown (FTFM) within the truckload unit. Adjusted income from operations declined 24% to $91.4 million in the December-end quarter. Also, adjusted operating ratio (operating expenses as a percentage of revenues) shrunk 140 basis points to 91.2%. Notably, lower the value of the ratio the better.
Segmental Highlights
Truckload revenues (excluding fuel surcharge) slipped 15% to $494.5 million. Average trucks (company trucks and owner-operated trucks) in the segment also fell 10.5% to 10,356. Further, revenue per truck per week for the segment dropped 4.3%. This downside was mainly due to unfavorable pricing. Income from operations in the segment was $40.4 million in the reported quarter, down 46%. Moreover, adjusted operating ratio deteriorated to 89.1% from 84.4% in the year-earlier period.
Intermodal revenues (excluding fuel surcharge) dipped 3% to $261.2 million, with revenue per order declining 4%, primarily due to a change in mix related to seasonal project orders. Segmental income from operations decreased 19% to $32.2 million as a result of higher third-party costs. Additionally, intermodal operating ratio deteriorated to 87.7% in the fourth quarter from the prior year’s 85.2%.
Logistics revenues (excluding fuel surcharge) dropped 19% to $227.8 million, primarily due to a customer in-sourcing activity in the segment’s import/export operations. Brokerage accounted for 85.7% of logistics revenues (excluding fuel surcharge) in the quarter compared with 77.9% in the prior year, with brokerage volume expanding 5% year over year.
However, net revenue compression primarily induced a 51% decline in segmental income from operations to $7.9 million. Further, operating ratio of the segment deteriorated to 96.5% from 95.3% in the fourth quarter of 2018.
2020 EPS View
The company expects full-year adjusted earnings per share between $1.25 and $1.35. Meanwhile, the company anticipates net capital expenditures of approximately $310 million in the year.
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 -5.97% due to these changes.
VGM Scores
At this time, Schneider National has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 this revision indicates a downward shift. Notably, Schneider National has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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