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The Zacks Analyst Blog Highlights: ArcBest, Covenant Logistics, Forward Air, Knight-Swift Transportation, Landstar System, Old Dominion Freight Line and USA Truck
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For Immediate Release
Chicago, IL – July 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: ArcBest Corporation (ARCB - Free Report) , Covenant Logistics Group, Inc. (CVLG - Free Report) , Forward Air Corporation (FWRD - Free Report) , Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , Landstar System, Inc. (LSTR - Free Report) , Old Dominion Freight Line, Inc. (ODFL - Free Report) and USA Truck, Inc. .
Here are highlights from Tuesday’s Analyst Blog:
Trucking Stocks Are Still Going Places
Trucking is one very attractive market right now.
"We're just in the beginning stages of this very robust recovery," said Bob Costello, chief economist at American Trucking Associations. He expects 6.4% GDP growth in 2021, the fastest annual growth rate since 1984. He expects this to be followed by 4.3% growth in 2022, which is also well above average.
Overall economic growth is very good for trucking stocks because increased production essentially means there's going to be more goods to be moved to more customers. And while some of this will be in the services segment, industry watchers confirm that there's also a lot of pent-up demand for goods. The initial days of the reopening have already depleted store inventories that Costello says are at "the lowest level in history."
The pandemic has altered buying habits to a certain degree, so more people will be buying more stuff from home. But there doesn't at the moment seem to be a marked reduction in those sales even as demand from brick-and-mortar picks up.
At the same time, the industry is battling with limited capacity (it takes 4-6 months for delivery of new trucks, which are now delayed because of chip shortages). And the paucity of labor remains a sore point for most truckers because the average age of drivers continues to rise with many approaching retirement. Regulatory factors also took some drivers off the road. Plus, the pandemic slowed down training, which in turn slowed down recruitment.
So there's a scarcity of drivers and a scarcity of trucks, which are together creating severe capacity constraints in the face of continually rising demand. Of course, this means rising rates. DAT data shows that between Jun 2020 and Jun 2021, the van load-to-truck increased 57.8% with a 47.1% increase in van spot rates. Flatbed road-to-truck increased 169.3% while spot rates jumped 52.1%. Reefer load-to-truck grew 111.7% while reefer spot rates increased 43.4%. Overall spot market loads increased 101.5% with overall capacity increasing 0.3%.
But of course not all of the rate increases are falling through to the bottom lines of trucking companies. DAT data also shows a 36.5% increase in fuel cost within this period. Wage rates have also picked up strongly as companies struggle to recruit and retain drivers.
The current lack of equilibrium between demand and supply is likely to continue through the rest of 2021 and most of 2022. As a result, trucking stocks are a great place to put your money. Here are a few worth picking up today-
Zacks #1 (Strong Buy) ranked ArcBest Corp. is currently expected to grow revenue and earnings 20.1% and 61.6% this year. The company's estimates have been rising consistently through the last 90 days. It has a solid surprise history (+618.3% average surprise in the last four quarters). The company reports on Aug 2.
Covenant Logistics Group is also a #1 ranked stock. It is expected to grow revenue 18.0% and earnings 194.4% this year. CVLG's estimates have also been rising and jumped 21.4% in the last 7 days after the company reported strong results. Its four-quarter surprise averages +33.1%.
Next up is Forward Air Corp., which carries a Zacks #2 (Buy) rating. It is expected to grow revenue and earnings by a respective 15.0% and 85.2% this year. Its estimates are also trending up, so be prepared for a strong announcement when the company reports on Jul 29.
#2 ranked Knight-Swift Transportation is expected to grow 2021 revenue and earnings by 20.2% and 44.0%, respectively. The 2021 estimate jumped 6.8% since the company reported results.
Landstar System carries a Zacks #2 rank. Its revenue and earnings are expected to grow 37.8% and 75.7% this year. It is also showing a steady estimate revision trend.
Old Dominion Freight Line has a Zacks #2 rank. The company, which will report on Jul 28, continues to see a positive estimate revision trend. Its current-year earnings are currently expected to grow 40.7% on 22.3% higher revenue.
And finally, we have #2 ranked USA Truck, which is expected to grow its earnings 223.5% this year. The company reports on Jul 29. Its estimate revision trend and surprise history (152.7% average beat in the last four quarters) are encouraging.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: ArcBest, Covenant Logistics, Forward Air, Knight-Swift Transportation, Landstar System, Old Dominion Freight Line and USA Truck
For Immediate Release
Chicago, IL – July 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: ArcBest Corporation (ARCB - Free Report) , Covenant Logistics Group, Inc. (CVLG - Free Report) , Forward Air Corporation (FWRD - Free Report) , Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , Landstar System, Inc. (LSTR - Free Report) , Old Dominion Freight Line, Inc. (ODFL - Free Report) and USA Truck, Inc. .
Here are highlights from Tuesday’s Analyst Blog:
Trucking Stocks Are Still Going Places
Trucking is one very attractive market right now.
"We're just in the beginning stages of this very robust recovery," said Bob Costello, chief economist at American Trucking Associations. He expects 6.4% GDP growth in 2021, the fastest annual growth rate since 1984. He expects this to be followed by 4.3% growth in 2022, which is also well above average.
Overall economic growth is very good for trucking stocks because increased production essentially means there's going to be more goods to be moved to more customers. And while some of this will be in the services segment, industry watchers confirm that there's also a lot of pent-up demand for goods. The initial days of the reopening have already depleted store inventories that Costello says are at "the lowest level in history."
The pandemic has altered buying habits to a certain degree, so more people will be buying more stuff from home. But there doesn't at the moment seem to be a marked reduction in those sales even as demand from brick-and-mortar picks up.
At the same time, the industry is battling with limited capacity (it takes 4-6 months for delivery of new trucks, which are now delayed because of chip shortages). And the paucity of labor remains a sore point for most truckers because the average age of drivers continues to rise with many approaching retirement. Regulatory factors also took some drivers off the road. Plus, the pandemic slowed down training, which in turn slowed down recruitment.
So there's a scarcity of drivers and a scarcity of trucks, which are together creating severe capacity constraints in the face of continually rising demand. Of course, this means rising rates. DAT data shows that between Jun 2020 and Jun 2021, the van load-to-truck increased 57.8% with a 47.1% increase in van spot rates. Flatbed road-to-truck increased 169.3% while spot rates jumped 52.1%. Reefer load-to-truck grew 111.7% while reefer spot rates increased 43.4%. Overall spot market loads increased 101.5% with overall capacity increasing 0.3%.
But of course not all of the rate increases are falling through to the bottom lines of trucking companies. DAT data also shows a 36.5% increase in fuel cost within this period. Wage rates have also picked up strongly as companies struggle to recruit and retain drivers.
The current lack of equilibrium between demand and supply is likely to continue through the rest of 2021 and most of 2022. As a result, trucking stocks are a great place to put your money. Here are a few worth picking up today-
Zacks #1 (Strong Buy) ranked ArcBest Corp. is currently expected to grow revenue and earnings 20.1% and 61.6% this year. The company's estimates have been rising consistently through the last 90 days. It has a solid surprise history (+618.3% average surprise in the last four quarters). The company reports on Aug 2.
Covenant Logistics Group is also a #1 ranked stock. It is expected to grow revenue 18.0% and earnings 194.4% this year. CVLG's estimates have also been rising and jumped 21.4% in the last 7 days after the company reported strong results. Its four-quarter surprise averages +33.1%.
Next up is Forward Air Corp., which carries a Zacks #2 (Buy) rating. It is expected to grow revenue and earnings by a respective 15.0% and 85.2% this year. Its estimates are also trending up, so be prepared for a strong announcement when the company reports on Jul 29.
#2 ranked Knight-Swift Transportation is expected to grow 2021 revenue and earnings by 20.2% and 44.0%, respectively. The 2021 estimate jumped 6.8% since the company reported results.
Landstar System carries a Zacks #2 rank. Its revenue and earnings are expected to grow 37.8% and 75.7% this year. It is also showing a steady estimate revision trend.
Old Dominion Freight Line has a Zacks #2 rank. The company, which will report on Jul 28, continues to see a positive estimate revision trend. Its current-year earnings are currently expected to grow 40.7% on 22.3% higher revenue.
And finally, we have #2 ranked USA Truck, which is expected to grow its earnings 223.5% this year. The company reports on Jul 29. Its estimate revision trend and surprise history (152.7% average beat in the last four quarters) are encouraging.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.