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Here's Why You Should Give Old Dominion Stock a Miss Now

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Old Dominion Freight Line (ODFL - Free Report) is grappling with significant challenges that are resulting in weak operational efficiency. The softness in demand is hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

ODFL: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the current-quarter earnings has been revised 10.9% downward over the past 60 days and is pegged at $1.31 per share. Meanwhile, the Zacks Consensus Estimate for 2025 earnings is pegged at $5.21 per share, indicating an 8.11% fall over the past 60 days.

The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

Dim Price Performance:  The company’s price trend reveals that its shares have fallen 3.8% year to date compared with the Transportation - Truck industry’s 9.6% decline.

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Image Source: Zacks Investment Research

Weak Zacks Rank: ODFL currently carries a Zacks Rank #4 (Sell).

Bearish Industry Rank: The industry to which Old Dominion Freight Line belongs currently has a Zacks Industry Rank of 243 (out of 245). Such an unfavorable rank places it in the bottom 1% of 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. Reckoning the industry’s performance becomes imperative in this case.

Headwinds: Old Dominion Freight Line faces significant challenges that are hampering the company’s prospects. In the first quarter, LTL tons per day fell 6.3% due to a 5.0% drop in daily shipments and a 1.4% decrease in shipment weight. This decline signals weakening demand, which may result from slowing economic activity. Although the company raised revenue per hundredweight, these pricing gains likely do not offset the steep drop in volume. As freight levels fall, Old Dominion risks underutilizing its network, which could reduce operational efficiency and weaken overall financial performance.

The current volume declines suggest increased pressure from competitors who may be more aggressive on pricing or capacity utilization. As rivals seek to maintain share in a shrinking market, the risk of rate competition grows, potentially challenging Old Dominion’s ability to sustain yield improvements.

Stocks to Consider

Investors interested in the Transportation sector may also consider Copa Holdings (CPA - Free Report) and Ryanair (RYAAY - Free Report) .

CPA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CPA has an expected earnings growth rate of 13% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 18.1% year to date.

RYAAY currently sports a Zacks Rank #1.

RYAAY has an expected earnings growth rate of 29.8% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 46.7%. Shares of RYAAY have rallied 24.1% year to date.


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