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Is a Beat in Store for Old Dominion (ODFL) in Q2 Earnings?

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Old Dominion Freight Line (ODFL - Free Report)  is scheduled to report second-quarter 2022 results on Jul 27, before market open.

The Zacks Consensus Estimate for ODFL’s second-quarter earnings has been revised 0.32% upward in the past 60 days to $3.10.  Old Dominionhas an impressive surprise history, with its earnings having outperformed the Zacks Consensus Estimate in all the last four quarters the average being 7%.

Against this backdrop, let’s examine the factors that are likely to have impacted Old Dominion’s second-quarter 2022 performance.

Gradual recovery in the freight environment is anticipated to have aided Old Dominion’s second-quarter performance. This is expected to be reflected in less than truckload (LTL) revenue per hundredweight. The Zacks Consensus Estimate for second-quarter LTL revenue per hundredweight suggests a rise of 16.6% from the year-ago quarter’s reported figure. The anticipated improvement in LTL revenue per hundredweight is likely to be reflected in LTL services’ revenues, ODFL’s major revenue-generating segment. The Zacks Consensus Estimate for second-quarter LTL tonnage per day indicates a 6.5% increase from the year-ago quarter’s reported figure.

Improvement in operating ratio (operating expenses as a percentage of revenues) is likely to get reflected in the second-quarter bottom-line result (driven by higher revenues).  The Zacks Consensus Estimate for the second-quarter operating ratio is pegged at 71%, indicating an improvement from 73% reported in first-quarter 2022. Lower the value of this key measure of efficiency, the better.

Higher operating expenses (due to a rise in costs pertaining to salaries, wages and benefits and an escalation in operating supplies and expenses) and high capital expenditures are likely to have hurt ODFL’s bottom line.

What Does the Zacks Model Say?

Our proven model conclusively predicts an earnings beat for Old Dominion this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, which is exactly the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Old Dominion has an Earnings ESP of +0.42% as the Most Accurate Estimate is currently pegged at $3.11, a cent above the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Old Dominion carries a Zacks Rank #3, currently.

Highlights of Q1 Earnings

Old Dominion Freight Line’s earnings per share of $2.60 outpaced the Zacks Consensus Estimate of $2.37. The bottom line surged 52.9% year over year. Revenues of $1497.3 million also surpassed the Zacks Consensus Estimate of $1,454.1 million and increased 32.9% year over year. The uptick was backed by a 12% increase in LTL (Less-Than-Truckload) tons per day and a 17.4% rise in LTL revenue per hundredweight.

Other Stocks to Consider

Here are a few other stocks worth considering from the broader Zacks Transportation sector, as our model shows that these have the right combination of elements to beat on second-quarter 2022 earnings:

C.H. Robinson Worldwide (CHRW - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank #2. CHRW will release results on Jul 27.

C.H. Robinson has an expected earnings growth rate of 16.6% for the current year. CHRW delivered a trailing four-quarter earnings surprise of 17.1%, on average.

CHRW has a long-term earnings growth rate of 9%.

Kirby (KEX - Free Report) has an Earnings ESP of +0.70% and a Zacks Rank of 2. KEX will release results on Jul 28.

Kirby has an expected earnings growth rate of 282.14% for the current year. KEX delivered a trailing four-quarter earnings surprise of 7.7%, on average.

KEX has a long-term earnings growth rate of 12%. 

Southwest Airlines (LUV - Free Report) has an Earnings ESP of +5.31% and a Zacks Rank of 3. Improved air-travel demand is likely to aid LUV’s results. LUV will release earnings on Jul 28.

Southwest has an expected earnings growth rate of 226.05% for the current year. LUV delivered a trailing four-quarter earnings surprise of 33.5%, on average. Southwest has a long-term earnings growth rate of 6%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.