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Old Dominion Freight Line (ODFL)
years before Dwight D.
Eisenhower formed the national interstate system in the US, Old
Dominion was moving
freight around this country. 80 years
after its humble beginnings, Old Dominion
was recently named the number 1 LTL
(less than truckload) carrier.
is in integral part of
interstate commerce here in the states and with almost 12,000 employees
6,000 tractors to pull their 16,000 pup trailers and 6,300+ vans, ODFL
major player in the space. They may not be the largest,
but they were the fastest growing; sales rose 25.7 percent in 2011 to
billion according to a study by SJ Consulting Group in Pittsburgh. The
trucking sector as a whole grew 11.6 percent in 2011 compared to 2010,
billion in the year.
higher gas prices and a
challenging consumer environment, can these trends continue?
Old Dominion was founded in Virginia back in 1934 and is now
Thomasville, NC. They serve over 48,000 direct
points around N America with a presence is just about every state (47)
in Canada, Mexico and the Caribbean. Through their OD Global division,
also offer worldwide LCL and container load services and logistics with
to Canada, Mexico, Alaska, Hawaii, the Caribbean, Europe, the Far East,
America and Oceana as well as worldwide
LCL & FCL Ocean service.
to the “Cass Freight Index Report” for February 2012, they noted a
reversal of a very long trend.” The
report stated that “month‐to‐month change in freight
movements in February was greater than that of expenditures. This is
for the shipper, as costs to move goods seem to have flattened out for
being. Compared to January, freight shipment volume was 2.5 percent
February, while freight spending was 1.2 percent higher. Annually,
volumes were up 3.5 percent from January 2011.”
American Trucking Associations’ For-Hire Truck Tonnage Index also rose
February after a 4.6% decline in January.
If with the bearish blip in Jan, February’s increase marks the sixth in
the past seven months. The index is 5.5% higher than it was in the same
ODFL is a small-cap (2.75 billion) company that is trading at about 17
forward (expectations for next quarter) earnings. ODFL has
been a Zacks Rank 1 strong buy since
sales increased 22% compared to the same period in 2010; earnings
from $1.35 in FY2010 to $2.44 in FY2011.
They are expected to earn $2.80 for the full year (FY2012) according to
the Zacks Consensus Estimate.
Of the 14 analysts who cover Old
Dominion, the consensus is for the company to grow earnings by 14.84%
in the current
year (FY2012) and roughly 15.37% in FY2013. The trucking
company has exceeded
analysts’ expectations to the upside 4 quarters in a row; their average
was a positive 20.56% over the past year.
In terms of the magnitude of
analyst estimate trends, we are seeing all of the consensus estimates
they were 90 days ago for the current and next quarter as well as
FY2013. ODFL is expected to earn 52
cents when they report on April 26th.
Performance & Technicals
Like many of my recent momentum picks, Old Dominion’s stock price has
been in a
clean, strong bullish channel since October of 2011. In
series of higher highs and higher lows, the
shares have gained 85% from the low of $27 to its recent high of almost
till remain above the 50 and 200 day moving averages of $45.65 and
$38.14 respectively. Look for support at both of those levels
in between them at $43. Volume
is also on the low side, which adds risk.
Average volume is roughly 390k shares traded daily.
has outperformed the S&P 500’s performance over the past year
by more than
29%. It outpaced it by over 9.7 in the past
3 months, but has become more correlated in the last month trailing the
you are looking for a company with strong ties to the domestic
may offer real economic clues during their earnings call at the end of
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
charge of the market-beating Zacks
Whisper Trader Service.