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Here's Why You Should Avoid Old Domain Freight Line (ODFL)
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Old Domain Freight Line’s (ODFL - Free Report) high operating expenses challenge the financial stability, with elevated labor costs further straining the company's bottom line. Economic weakness, too, does not bode well for the company, thereby making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 2.7% downward in the past 60 days. For the current year, the consensus mark for earnings has moved 1.2% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: ODFL currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Old Domain’s shares have declined 3.4% in the past year against its industry’s 0.5% fall.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ODFL belongs currently has a Zacks Industry Rank of 210 (out of 250). Such an unfavorable rank places it in the bottom 16% 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. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: The northward movement in operating expenses is hurting Old Domain’sbottom line, challenging its financial stability. In the first quarter of 2024, total operating expenses rose by 1.4% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the first quarter of 2024, labor costs, including compensation and benefit expenses, rose 2.5% year over year, amounting to $668.4 million. The uptick was primarily due to a 3.5% year-over-year increase in salaries and wages following the annual wage increase in September 2023. Productive labor costs, which include wages for drivers, platform employees and fleet technicians, rose slightly by 0.3% year over year.
General supplies and expenses jumped 15.25% year over year, amounting to$45.6 million. Expenses on insurance and claims moved up 13.5% year over year. Miscellaneous expenses surged 45.4% year over year.
Moreover, the ongoing economic weakness led to a 3.2% year-over-year decline in ODFL's less-than-truckload (LTL) tons per day, primarily driven by a 2.7% year-over-year reduction in LTL weight per shipment.
SkyWest currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 787% for the current year.
SKYW has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 102.7% in the past year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 59% in the past year.
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Here's Why You Should Avoid Old Domain Freight Line (ODFL)
Old Domain Freight Line’s (ODFL - Free Report) high operating expenses challenge the financial stability, with elevated labor costs further straining the company's bottom line. Economic weakness, too, does not bode well for the company, thereby making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 2.7% downward in the past 60 days. For the current year, the consensus mark for earnings has moved 1.2% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: ODFL currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Old Domain’s shares have declined 3.4% in the past year against its industry’s 0.5% fall.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ODFL belongs currently has a Zacks Industry Rank of 210 (out of 250). Such an unfavorable rank places it in the bottom 16% 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. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: The northward movement in operating expenses is hurting Old Domain’sbottom line, challenging its financial stability. In the first quarter of 2024, total operating expenses rose by 1.4% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the first quarter of 2024, labor costs, including compensation and benefit expenses, rose 2.5% year over year, amounting to $668.4 million. The uptick was primarily due to a 3.5% year-over-year increase in salaries and wages following the annual wage increase in September 2023. Productive labor costs, which include wages for drivers, platform employees and fleet technicians, rose slightly by 0.3% year over year.
General supplies and expenses jumped 15.25% year over year, amounting to$45.6 million. Expenses on insurance and claims moved up 13.5% year over year. Miscellaneous expenses surged 45.4% year over year.
Moreover, the ongoing economic weakness led to a 3.2% year-over-year decline in ODFL's less-than-truckload (LTL) tons per day, primarily driven by a 2.7% year-over-year reduction in LTL weight per shipment.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include SkyWest (SKYW - Free Report) and Kirby Corporation (KEX - Free Report) .
SkyWest currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 787% for the current year.
SKYW has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 102.7% in the past year.
KEX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. Kirby has an expected earnings growth rate of 42.5% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 59% in the past year.