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Trucking Industry Up 29% Year to Date: More Room to Run?
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The Zacks Transportation - Truck industry currently stands to benefit from the improving freight demand scenario, declining expenses (led by a fall in fuel price) and solid investor-friendly steps.
Even though the overall freight demand scenario remains weak, some signs of improvement are evident, which bode well for the industry. For example, truckload demand rose 0.75% in September, marking the third consecutive month of increase. Moreover, freight demand indicators backed the improving scenario in September, as real consumer spending and manufacturing increased.
The industry also stands to benefit from the decline in fuel prices. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of trucking stocks.Notably, oil prices declined almost 3.3% so far this year.
Additionally, consistent shareholder-friendly initiatives in the form of dividend payouts or share buybacks imply the solid financial strength of companies in the trucking industry. Dividend-paying stocks provide a solid income stream and have fewer chances of experiencing wild price swings. These stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty like the current scenario.
To name a few, in February 2023, Knight-Swift Transportation Holdings Inc. (KNX - Free Report) upped its dividend by 16.7% to 14 cents. In the same time frame, Old Dominion Freight Line, Inc. (ODFL - Free Report) upped its dividend by 33% to 40 cents per share. For the first nine months of 2023, ODFL rewarded its shareholders through $368.1 million of share repurchases and $131.5 million of dividend payments. Currently, KNX and ODFL carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In January 2023, J.B. Hunt Transport Services, Inc. (JBHT - Free Report) upped its dividend by 5% to 42 cents per share. During the first nine months of 2023, JBHT purchased almost 765,000 shares for $135.0 million and paid dividends worth $130.54 million. As of Sep 30, 2023, JBHT had approximately $416 million remaining under its share repurchase authorization.
In May 2023, Werner Enterprises, Inc. (WERN - Free Report) announced a hike in its dividend payout. Werner’s board of directors has approved a dividend hike of 7.7%, thereby raising its quarterly cash dividend from 13 cents per share to 14 cents. As of Sep 30, 2023, WERN had 2.3 million shares available under its share repurchase authorization. Currently, JBHT and WERN both carry a Zacks Rank #5 (Strong Sell).
Concurrent with the second quarter of 2023 results, Landstar System, Inc.’s (LSTR - Free Report) board of directors has announced a quarterly dividend of 33 cents per share, indicating a hike of 10% from its previous dividend payout of 30 cents. LSTR is presently a Zacks Rank #4 (Sell) stock.
We believe such shareholder-friendly initiatives should boost investor confidence and positively impact the bottom line. Notably, the industry has gained 29% so far this year, outperforming the S&P 500 Index’s northward movement of 18.5% and 3.2% rise of the Zacks Transportation sector.
Image Source: Zacks Investment Research
Despite such positives, the trucking industry continues to grapple with issues like prolonged truck driver shortages. Driver shortage continues to be a major challenge facing the trucking industry. As old drivers retire, trucking companies find it difficult to hire drivers since the job does not appeal to the younger generation. The driver scarcity problem is likely to increase as freight demand further improves with the economy recovering.
Further, supply-chain woes are also hurting the prospects of the stocks belonging to the trucking industry.
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Trucking Industry Up 29% Year to Date: More Room to Run?
The Zacks Transportation - Truck industry currently stands to benefit from the improving freight demand scenario, declining expenses (led by a fall in fuel price) and solid investor-friendly steps.
Even though the overall freight demand scenario remains weak, some signs of improvement are evident, which bode well for the industry. For example, truckload demand rose 0.75% in September, marking the third consecutive month of increase. Moreover, freight demand indicators backed the improving scenario in September, as real consumer spending and manufacturing increased.
The industry also stands to benefit from the decline in fuel prices. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of trucking stocks.Notably, oil prices declined almost 3.3% so far this year.
Additionally, consistent shareholder-friendly initiatives in the form of dividend payouts or share buybacks imply the solid financial strength of companies in the trucking industry. Dividend-paying stocks provide a solid income stream and have fewer chances of experiencing wild price swings. These stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty like the current scenario.
To name a few, in February 2023, Knight-Swift Transportation Holdings Inc. (KNX - Free Report) upped its dividend by 16.7% to 14 cents. In the same time frame, Old Dominion Freight Line, Inc. (ODFL - Free Report) upped its dividend by 33% to 40 cents per share. For the first nine months of 2023, ODFL rewarded its shareholders through $368.1 million of share repurchases and $131.5 million of dividend payments. Currently, KNX and ODFL carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In January 2023, J.B. Hunt Transport Services, Inc. (JBHT - Free Report) upped its dividend by 5% to 42 cents per share. During the first nine months of 2023, JBHT purchased almost 765,000 shares for $135.0 million and paid dividends worth $130.54 million. As of Sep 30, 2023, JBHT had approximately $416 million remaining under its share repurchase authorization.
In May 2023, Werner Enterprises, Inc. (WERN - Free Report) announced a hike in its dividend payout. Werner’s board of directors has approved a dividend hike of 7.7%, thereby raising its quarterly cash dividend from 13 cents per share to 14 cents. As of Sep 30, 2023, WERN had 2.3 million shares available under its share repurchase authorization. Currently, JBHT and WERN both carry a Zacks Rank #5 (Strong Sell).
Concurrent with the second quarter of 2023 results, Landstar System, Inc.’s (LSTR - Free Report) board of directors has announced a quarterly dividend of 33 cents per share, indicating a hike of 10% from its previous dividend payout of 30 cents. LSTR is presently a Zacks Rank #4 (Sell) stock.
We believe such shareholder-friendly initiatives should boost investor confidence and positively impact the bottom line. Notably, the industry has gained 29% so far this year, outperforming the S&P 500 Index’s northward movement of 18.5% and 3.2% rise of the Zacks Transportation sector.
Image Source: Zacks Investment Research
Despite such positives, the trucking industry continues to grapple with issues like prolonged truck driver shortages. Driver shortage continues to be a major challenge facing the trucking industry. As old drivers retire, trucking companies find it difficult to hire drivers since the job does not appeal to the younger generation. The driver scarcity problem is likely to increase as freight demand further improves with the economy recovering.
Further, supply-chain woes are also hurting the prospects of the stocks belonging to the trucking industry.