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Bear of the Day: ArcBest (ARCB)

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ArcBest (ARCB - Free Report) ) currently lands a Zacks Rank #5 (Strong Sell) with its Transportation-Truck Industry in the bottom 4% of over 250 Zacks industries. To that point, ArcBest missed its first-quarter expectations in late April and investors may want to be cautious at the moment.

Despite being a logistics leader in freight transportation and solutions, the broader economic environment continues to weigh on the Transportation-Truck Industry and may lead to more near-term volatility in ArcBest stock.

Subpar Q1 

ArcBest reported its first-quarter results on April 28 with earnings of $1.58 per share missing EPS estimates of $1.78 by -11%. Sales also came up short by -10% at $1.10 billion compared to top-line estimates of $1.22 billion.

Year over year, earnings declined -49% with EPS at $3.08 in Q1 2022, although this was a tougher-to-compete-against prior-year quarter. First quarter sales were down -17% from a year ago.

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Declining Earnings Estimates

With ArcBest already up against a tough year to folllow, earnings estimate revisions have continued to decline following the subpar Q1 results.

Within the last 30 days, fiscal 2023 earnings estimates have declined -14% with FY24 EPS estimates dropping -5%.

ArcBest earnings are now forecasted to drop -36% this year at $8.67 per share compared to EPS of $13.66 in 2022. Fiscal 2024 earnings are expected to stabilize and rise 30% but the declining earnings estimates are taking away from the anticipated rebound.

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ArcBest stock is still up +24% year to date but has started to give back gains. Currently, ArcBest has an “F” Zacks Style Scores grade for Momentum in correlation with its broader industry concerns and shares of ARCB are now down -7% since its first-quarter report.

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Image Source: Zacks Investment Research

Bottom Line

With ArcBest’s outlook starting to weaken at the moment, shares of ARCB could continue to fall for now and it may be best to stay on the sidelines until the smoke clears. There should continue to be longer-term value but investors will want to see a stop to the trend of declining earnings estimates.

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