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Here's Why Investors Should Give Werner (WERN) a Miss Now
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Werner Enterprises (WERN - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 17.11% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 13.25% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Unimpressive Price Performance: WERN has declined 1.9% over the past three months compared with its industry’s 0.3% fall in the same time frame.
Image Source: Zacks Investment Research
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). Moreover, WERN’s current Momentum Style Score of D shows its short-term unattractiveness.
Other Headwinds: Werner Enterprises is suffering from weak freight demand. Due to this, WERN reported lower-than-expected earnings per share in the first quarter of 2023. As a result, management lowered its 2023 guidance for growth in the Truckload Transportation Services or TTS segment. Werner anticipates TTS truck growth between negative 2% and 1% (prior view: 1-4%).
Moreover, high operating expenses primarily due to increased salaries, wages and benefits, escalated fuel, and rent and purchased transportation expenses keep WERN’s bottom line under pressure. Werner’s weak liquidity position is also concerning.
Bearish Industry Rank:The industry to which WERN belongs, currently has a Zacks Industry Rank of 246 (of 250 plus groups). Such an unfavorable rank places WERN in the bottom 2% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Key Picks
Some better-ranked stock in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and Global Ship Lease (GSL - Free Report) , each currently sport a Zacks Rank #1 (Strong Buy).
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields.
Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 22.4% upward over the past 60 days.
GSL is being aided by the bullish sentiment surrounding the containership market. GSL’s strong balance sheet is an added positive. The uptick in trading volumes bodes well for Global Ship Lease.
The Zacks Consensus Estimate for current-year earnings has moved up 4.2% over the past 60 days. GSL outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 15.64%.
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Here's Why Investors Should Give Werner (WERN) a Miss Now
Werner Enterprises (WERN - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 17.11% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 13.25% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Unimpressive Price Performance: WERN has declined 1.9% over the past three months compared with its industry’s 0.3% fall in the same time frame.
Image Source: Zacks Investment Research
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). Moreover, WERN’s current Momentum Style Score of D shows its short-term unattractiveness.
Other Headwinds: Werner Enterprises is suffering from weak freight demand. Due to this, WERN reported lower-than-expected earnings per share in the first quarter of 2023. As a result, management lowered its 2023 guidance for growth in the Truckload Transportation Services or TTS segment. Werner anticipates TTS truck growth between negative 2% and 1% (prior view: 1-4%).
Moreover, high operating expenses primarily due to increased salaries, wages and benefits, escalated fuel, and rent and purchased transportation expenses keep WERN’s bottom line under pressure. Werner’s weak liquidity position is also concerning.
Bearish Industry Rank:The industry to which WERN belongs, currently has a Zacks Industry Rank of 246 (of 250 plus groups). Such an unfavorable rank places WERN in the bottom 2% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Key Picks
Some better-ranked stock in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and Global Ship Lease (GSL - Free Report) , each currently sport a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields.
Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 22.4% upward over the past 60 days.
GSL is being aided by the bullish sentiment surrounding the containership market. GSL’s strong balance sheet is an added positive. The uptick in trading volumes bodes well for Global Ship Lease.
The Zacks Consensus Estimate for current-year earnings has moved up 4.2% over the past 60 days. GSL outpaced the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 15.64%.