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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 26.3% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 12.1% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Momentum Style Score of F shows its short-term unattractiveness.
Unimpressive Price Performance: WERN has declined 17.6% over the past six months against its industry’s 15.1% growth.
Image Source: Zacks Investment Research
Other Headwinds: Werner Enterprises is suffering from weak freight demand. Due to this, WERN reported lower-than-expected earnings per share in each of the first three quarters of 2023. As a result, management lowered its 2023 guidance for growth in the Truckload Transportation Services or TTS segment. It anticipates TTS truck growth to be between (3%) and (5%) (prior view: (2%) to (4%)).
Moreover, high operating expenses primarily due to increased salaries, wages and benefits, escalated fuel, and rent and purchased transportation costs 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 212 (of 250 plus groups). Such an unfavorable rank places WERN in the bottom 15% 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.
Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a new year-round route between Montreal and Madrid. You can see the complete list of today’s Zacks #1 Rank stocks here.
The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.
SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet-modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.
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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 26.3% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 12.1% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Momentum Style Score of F shows its short-term unattractiveness.
Unimpressive Price Performance: WERN has declined 17.6% over the past six months against its industry’s 15.1% growth.
Image Source: Zacks Investment Research
Other Headwinds: Werner Enterprises is suffering from weak freight demand. Due to this, WERN reported lower-than-expected earnings per share in each of the first three quarters of 2023. As a result, management lowered its 2023 guidance for growth in the Truckload Transportation Services or TTS segment. It anticipates TTS truck growth to be between (3%) and (5%) (prior view: (2%) to (4%)).
Moreover, high operating expenses primarily due to increased salaries, wages and benefits, escalated fuel, and rent and purchased transportation costs 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 212 (of 250 plus groups). Such an unfavorable rank places WERN in the bottom 15% 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.
Stocks to Consider
Investors interested in the broader Transportation sector may consider stocks like Air Canada (ACDVF - Free Report) and SkyWest (SKYW - Free Report) .
Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a new year-round route between Montreal and Madrid. You can see the complete list of today’s Zacks #1 Rank stocks here.
The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.
SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet-modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.