It has been about a month since the last earnings report for Werner Enterprises (WERN Quick QuoteWERN - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Werner due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Werner's Q2 Earnings Lag Estimates

Werner's second-quarter 2022 earnings of 87 cents per share missed the Zacks Consensus Estimate of $1.02. The bottom line rose 1.1% on a year-over-year basis.

Total revenues of $836.3 million outperformed the Zacks Consensus Estimate of $784.2 million. The top line increased 29% on a year-over-year basis, primarily on higher revenues in the Truckload Transportation Services and Logistics segments.

Operating income (adjusted) came in at $77.6 million in the reported quarter, down 2% year over year. Adjusted operating margin fell 290 basis points (bps) to 9.3%. Operating expenses rose 32.9% to $761.35 million in the reported quarter.

Segmental Results

Revenues in the Truckload Transportation Services (TTS) segment increased 25% on a year-over-year basis to $613.62 million. Adjusted operating income decreased 11% to $66.2 million. Adjusted operating margin surged 430 bps to 10.8%. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 430 bps to 89.2%.

The Logistics segment’s revenues totaled $203.86 million, up 44% year over year. The segment reported an adjusted operating income of $12.9 million, up more than 100% year over year. Adjusted operating margin was 6.4%, reflecting an improvement of 360 bps.

Liquidity

As of Jun 30, 2022, Werner had cash and cash equivalents of $54.42 million compared with $125.95 million at the end of March 2022. Long-term debt (net of current portion) totaled $440 million at the end of the reported quarter compared with $421.25 million at the end of March 2022.

Outlook

Werner continues to anticipate TTS truck growth of 2-5% for 2022 from the year-ago reported figure. Net capital expenditures are estimated in the band of $275-$325 million (previous view: $250-$300 million).

Under the TTS guidance, WERN estimates Dedicated revenue per truck per week to increase 6-8% (previous view: 4-6%) in 2022, owing to expectations of strong rates. One-way Truckload revenues per total mile are predicted to now climb 2-5% (previous outlook: 14-17%) in the second quarter of 2022 from the comparable period’s level in 2021, owing to moderating freight market, lapping ECM acquisition and declining spot rates.

Werner expects truck age to be 2.2 years for 2022 (commensurate with 2021), while 2022 trailer age is forecast to be 4.8 years. Effective income tax rate is still expected to be at 24.5-25.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Werner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Werner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.