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Here's Why Investors Should Give Werner (WERN) a Miss
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Werner Enterprises (WERN - Free Report) is currently embroiled in a complex web of challenges, a situation that we believe has significantly dampened its appeal as an investment option.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 24.4% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 13.2% south in the same time frame. The bearish alterations in estimate revisions underscore a notable decline in brokers' confidence in the stock.
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). The company’s current Value Score of C shows its unattractiveness.
Unimpressive Price Performance: WERN has declined 19.1% in the past year against its industry’s growth of 26.8%.
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 past four quarters. As a result, management gave a bearish 2024 guidance regarding the Truckload Transportation Services (“TTS”) segment. WERN expects TTS truck growth to be either flat or decline up to 3% from the 2023 actuals.
Moreover, high operating expenses, primarily due to increased salaries, wages and benefits, fuel and rent and purchased transportation expenses, keep the 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 225 (of 252). Such an unfavorable rank places WERN in the bottom 11% 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.
GATX currently carries Zacks Rank #2 (Buy) and has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 6.1% upward over the past 90 days. GATX has an expected earnings growth rate of 3.68% for 2024. Shares of GATX have risen 13.9% in the past year.
Skywest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 11.1% over the past 90 days. Shares of SKYW have surged 222.2% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.
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Here's Why Investors Should Give Werner (WERN) a Miss
Werner Enterprises (WERN - Free Report) is currently embroiled in a complex web of challenges, a situation that we believe has significantly dampened its appeal as an investment option.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 24.4% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 13.2% south in the same time frame. The bearish alterations in estimate revisions underscore a notable decline in brokers' confidence in the stock.
Weak Zacks Rank and Style Score: Werner currently carries a Zacks Rank #5 (Strong Sell). The company’s current Value Score of C shows its unattractiveness.
Unimpressive Price Performance: WERN has declined 19.1% in the past year against its industry’s growth of 26.8%.
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 past four quarters. As a result, management gave a bearish 2024 guidance regarding the Truckload Transportation Services (“TTS”) segment. WERN expects TTS truck growth to be either flat or decline up to 3% from the 2023 actuals.
Moreover, high operating expenses, primarily due to increased salaries, wages and benefits, fuel and rent and purchased transportation expenses, keep the 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 225 (of 252). Such an unfavorable rank places WERN in the bottom 11% 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
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include GATX Corporation (GATX - Free Report) and Skywest Inc. (SKYW - Free Report) .
GATX currently carries Zacks Rank #2 (Buy) and has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 6.1% upward over the past 90 days. GATX has an expected earnings growth rate of 3.68% for 2024. Shares of GATX have risen 13.9% in the past year.
Skywest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 11.1% over the past 90 days. Shares of SKYW have surged 222.2% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.