Fleets to Post Higher 3Q Earnings on Rising Rates, Strong Economy
This story appears in the Oct. 20 print edition of Transport Topics.
Third-quarter earnings at nearly all publicly traded trucking businesses are expected to show solid year-over-year growth, propelled by factors such as higher rates and the improving economy, industry analysts believe.
On average, less-than-truckload operators’ earnings are likely to rise nearly 40%, faster than truckload or logistics operators, with help from manufacturing growth, based on a Transport Topics review of Bloomberg News average earnings estimates.
“LTL carriers are benefiting from industrial strength and the truckload capacity shortage,” said an Oct. 3 report from analyst Stifel, Nicolaus & Co. “Pricing momentum remains with the LTL carriers.”
In total, 27 of 29 publicly traded companies are expected to top last year’s third-quarter results, based on analysts’ forecasts.
J.B. Hunt Transport Services Inc., the first to report on Oct. 14, said its third-quarter net income rose to $102.4 million, or 87 cents per share, from $89.5 million, or 75 cents, a year ago. Hunt ranks No. 3 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
Elsewhere in the truckload sector, No. 43 Covenant Transportation Group is expected to post the best results, nearly tripling last year’s performance. Earnings are projected to rise 11% at both No. 1 UPS Inc. and Ryder System.
In general, analysts believe LTL is poised to star.
No. 5 YRC Worldwide is ex-pected to post the most improvement in the LTL sector, with potentially positive net income from operations, after a $4.24 per-share loss in the same 2013 period. YRC said last month that pricing and tonnage improved in both the National and Regional units.
If net income resulting from operations is positive, it would be the first such quarter in seven years.
Elsewhere in the LTL sector, No. 13 ArcBest Corp. earnings that include LTL ABF Freight System are pegged at 44% growth, with 30% at No. 4 Con-way Inc., 29% at No. 25 Saia Inc. and 24% at No. 12 Old Dominion Freight Line.
“Truckload pricing continues to advance in the mid-single-digit range, up 5.3% on average thus far in 2014 and getting progressively stronger as the year has gone on,” said a report from Arthur Hatfield at Raymond James Transportation Services.
Benjamin Hartford, a Robert W. Baird & Co. analyst, said companies with strong spot-market presence should post stronger results than those that don’t use load boards as much. His report cited gainers such as Covenant, No. 10 Landstar System at 26% and No. 31 Knight Transportation at 26% better results.
Among TL carriers, No. 28 Universal Truckload Services Inc.’s 6.5% decline to 43 cents per share is the only negative year-over-year trend.
Elsewhere in the TL sector, No. 50 USA Truck is expected to build on its second-quarter return to profitability by posting positive net income of 10 cents per share and reversing last year’s loss.
Like Hunt, No. 8 Hub Group, another large user of intermodal, was expected to report higher net income, despite ongoing rail service difficulties.
Though Hub’s earnings in-crease was pegged at 8%, or 54 cents per share, the company said during the quarter that delays lowered productivity and earnings alike.
In the logistics sector, C.H. Robinson and Echo Global Logistics are expected to im-prove earnings by 16%. Only UTi Worldwide is likely to report lower third-quarter results.
