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Old Dominion (ODFL) Rises 45.6% in the Past Year: Here's Why
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Shares of Old Dominion Freight Line (ODFL - Free Report) have exhibited an uptrend on the bourses in the past year, gaining 45.6% compared with its industry’s 27.6% rise.
Image Source: Zacks Investment Research
Let’s delve into the reasons for this outperformance.
Old Dominion is benefiting from the strong performance of the LTL segment (which is its primary revenue generator) owing to improved freight conditions. With an 18.3% increase in LTL tons per day and a rise in LTL revenue per hundredweight, ODFL’s revenue per day climbed 38.3% year over year in February 2022. LTL tons per day benefited from a 19.8% increase in LTL shipments per day. In 2021, revenues from the LTL services segment increased 30.7% on a year-over-year basis. In 2021, LTL shipments and LTL revenue per shipment rose 18.5% and 10.2%, respectively.
Improvement in operating ratio (operating expenses, as a percentage of revenues) is also encouraging. At the end of 2020, the metric stood at 77.4% compared with 80.1% at the end of 2019. Lower the value of this metric, the better. With freight conditions having improved, the top line is likely to register an improvement. This combined with low costs are boosting the ratio further. Evidently, the ratio increased to 73.5% in 2021.
Moreover, Old Dominion’s Momentum Score of A highlights the stock’s short-term attractiveness.
Favorable Estimate Revisions
Driven by the above tailwinds, the Zacks Consensus Estimate for its current-year earnings has increased 5.5% to $10.82 per share in the past 60 days.
Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Union Pacific Corporation (UNP - Free Report) and Triton International Limited .
The long-term expected EPS (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all the segments. While the Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks, the Integrated Capacity Solutions (ICS) unit is gaining from favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 27.9% in the past year. J.B. Hunt currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS (three to five years) growth rate for Union Pacific is pegged at 10%. With economic activities gaining pace, freight revenues (accounting for a bulk of the top line) are improving. Freight revenues increased 11% year over year in 2021. Segment-wise, freight revenues in 2021 increased 12%, 11% and 11% in the bulk, industrial and premium units, respectively.
Driven by the tailwinds, the stock has increased 25.4% in the past year. UNP currently carries a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual increases in trade volumes and container demand bode well for the company. With easing coronavirus-led restrictions in the United States and Europe, the company saw a strong rebound in its business in the third, the fourth of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 13.4% in the past year. TRTN currently carries a Zacks Rank #2.
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Old Dominion (ODFL) Rises 45.6% in the Past Year: Here's Why
Shares of Old Dominion Freight Line (ODFL - Free Report) have exhibited an uptrend on the bourses in the past year, gaining 45.6% compared with its industry’s 27.6% rise.
Image Source: Zacks Investment Research
Let’s delve into the reasons for this outperformance.
Old Dominion is benefiting from the strong performance of the LTL segment (which is its primary revenue generator) owing to improved freight conditions. With an 18.3% increase in LTL tons per day and a rise in LTL revenue per hundredweight, ODFL’s revenue per day climbed 38.3% year over year in February 2022. LTL tons per day benefited from a 19.8% increase in LTL shipments per day. In 2021, revenues from the LTL services segment increased 30.7% on a year-over-year basis. In 2021, LTL shipments and LTL revenue per shipment rose 18.5% and 10.2%, respectively.
Improvement in operating ratio (operating expenses, as a percentage of revenues) is also encouraging. At the end of 2020, the metric stood at 77.4% compared with 80.1% at the end of 2019. Lower the value of this metric, the better. With freight conditions having improved, the top line is likely to register an improvement. This combined with low costs are boosting the ratio further. Evidently, the ratio increased to 73.5% in 2021.
Moreover, Old Dominion’s Momentum Score of A highlights the stock’s short-term attractiveness.
Favorable Estimate Revisions
Driven by the above tailwinds, the Zacks Consensus Estimate for its current-year earnings has increased 5.5% to $10.82 per share in the past 60 days.
Zacks Rank & Stocks to Consider
Old Dominion carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Union Pacific Corporation (UNP - Free Report) and Triton International Limited .
The long-term expected EPS (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all the segments. While the Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks, the Integrated Capacity Solutions (ICS) unit is gaining from favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 27.9% in the past year. J.B. Hunt currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS (three to five years) growth rate for Union Pacific is pegged at 10%. With economic activities gaining pace, freight revenues (accounting for a bulk of the top line) are improving. Freight revenues increased 11% year over year in 2021. Segment-wise, freight revenues in 2021 increased 12%, 11% and 11% in the bulk, industrial and premium units, respectively.
Driven by the tailwinds, the stock has increased 25.4% in the past year. UNP currently carries a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual increases in trade volumes and container demand bode well for the company. With easing coronavirus-led restrictions in the United States and Europe, the company saw a strong rebound in its business in the third, the fourth of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 13.4% in the past year. TRTN currently carries a Zacks Rank #2.