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Here's Why Investors Should Avoid Old Domain (ODFL) Stock Now
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Old Domain Freight Line’s (ODFL - Free Report) financial stability is challenged by escalated operating expenses. Elevated labor costs are further putting a strain on 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 9.8% downward in the past 60 days. For the current year, the consensus mark for earnings has moved 5.02% 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 1.4% in the past year against its industry’s 0.4% rise.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ODFL belongs currently has a Zacks Industry Rank of 226 (out of 251). Such an unfavorable rank places it in the bottom 10% 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 second quarter of 2024, total operating expenses rose by 5.4% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the second quarter of 2024, labor costs, including compensation and benefit expenses, rose 6.3% year over year, amounting to $683.7 million.
General supplies and expenses jumped 15% year over year, amounting to$44.4 million. Expenses on insurance and claims moved up 11.4% year over year. Miscellaneous expenses surged to $7.7 million.
Moreover, the ongoing economic weakness led to a 0.7% year-to-date decline in ODFL's less-than-truckload (LTL) tons per day, primarily driven by a 1.9% year-to-date reduction in LTL weight per shipment.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 6.8% in the past year.
WAB sports a Zacks Rank #1 at present andhas an expected earnings growth rate of 26% 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 11.8%. Shares of WAB have climbed 44% in the past year.
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Here's Why Investors Should Avoid Old Domain (ODFL) Stock Now
Old Domain Freight Line’s (ODFL - Free Report) financial stability is challenged by escalated operating expenses. Elevated labor costs are further putting a strain on 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 9.8% downward in the past 60 days. For the current year, the consensus mark for earnings has moved 5.02% 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 1.4% in the past year against its industry’s 0.4% rise.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ODFL belongs currently has a Zacks Industry Rank of 226 (out of 251). Such an unfavorable rank places it in the bottom 10% 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 second quarter of 2024, total operating expenses rose by 5.4% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the second quarter of 2024, labor costs, including compensation and benefit expenses, rose 6.3% year over year, amounting to $683.7 million.
General supplies and expenses jumped 15% year over year, amounting to$44.4 million. Expenses on insurance and claims moved up 11.4% year over year. Miscellaneous expenses surged to $7.7 million.
Moreover, the ongoing economic weakness led to a 0.7% year-to-date decline in ODFL's less-than-truckload (LTL) tons per day, primarily driven by a 1.9% year-to-date reduction in LTL weight per shipment.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.5% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 6.8% in the past year.
WAB sports a Zacks Rank #1 at present andhas an expected earnings growth rate of 26% 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 11.8%. Shares of WAB have climbed 44% in the past year.