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Bear of the Day: ArcBest (ARCB)

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When looking for the next Bear of the Day I often look at the weakest stocks in the weakest industries. I don’t mean weakest in terms of price action, but rather, stocks and industries with weak earnings trends. A stock’s price can change on a dime for no reason at all. But a stock’s earnings trend, that takes weeks, even months to develop. Stocks with negative earnings trends can be stuck in those trends for a long time, especially when there is weakness in the overall industry.

Today’s Bear of the Day is one of those stocks with a weak trend in a weak industry. I’m talking about Zacks Rank #5 (Strong Sell) ArcBest ARCB. ArcBest Corporation provides freight transportation services and integrated logistics solutions worldwide. It operates through three segments: Asset-Based, ArcBest, and FleetNet. The Asset-Based segment transports general commodities, such as food, textiles, apparel, furniture, appliances, chemicals, nonbulk petroleum products, rubber, plastics, metal and metal products, wood, glass, automotive parts, machinery, and miscellaneous manufactured products through less-than-truckload services. It also offers motor carrier freight transportation services to customers in Mexico through arrangements with trucking companies. The ArcBest segment provides expedite freight transportation services to commercial and government customers; premium logistics services, such as deployment of specialized equipment to meet linehaul requirements; and international freight transportation with air, ocean, and ground services.

The Transportation – Truck industry sits down in the Bottom 11% of our Zacks Industry Rank. The trade war has a lot to do with that. Just because the US and China have agreed on Phase One of their trade agreement does not mean that all economic problems are fixed. It will take months for the backlog to work itself though the economic system. This industry could be under pressure for a long time. ArcBest earnings have been under pressure as well. Over the last sixty days, seven analysts have cut their earnings estimates for the current year and next year. The bearish sentiment has dropped our Zacks Consensus Estimate for the current year from $3.25 down to $2.77. Next year’s number has come down from $3.46 to $3.01.

While the whole industry has been under pressure, there are a few stocks out there which are still in the good graces of the Zacks Rank. For investors looking for a value play while the industry is in the dumps, two stocks are Zacks Rank #2 (Buy) stocks in the industry. Both Heartland Express (HTLD - Free Report) and Saia SAIA enjoy these ranks.

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