ABF | October revenue up 20%

[Sumting Wong]

LTL carriers off to hot Q4 start

Less-than-truckload carriers report strong October results. But one analyst questions if the stocks have run too far ahead of results.

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In its quarterly filing with the Securities and Exchange Commission, ArcBest (NASDAQ: ARCB) said daily billed revenue in its asset-based segment, which includes LTL, was up 20% year-over-year. This was in line with the growth rate the carrier reported in the third quarter.

The revenue increase was comprised of an 18% year-over-year jump in yield, inclusive of fuel surcharges, and a 1% increase in daily tonnage. A “strong pricing environment” with “increased customer business levels” were cited as catalysts.

Old Dominion Freight Line (NASDAQ: ODFL) recorded a 36% year-over-year increase in daily revenue during October. Tonnage per day was up 16% (daily shipments up 19% with weight per shipment down 3%) and yields (including fuel revenue) moved 17% higher.

However, the carrier muted some of the excitement around the top-line surge on its third-quarter call with analysts, saying the record growth accompanies some expected cost catch-up over the next couple of quarters. It’s also looking to minimize its reliance on third-party linehaul capacity, which has increased alongside record growth and requires additional investment.

 

[Sumting Wong]

He raised his earnings expectations for the group, lifting ArcBest’s estimates by more than 30% in 2022 and 40% in 2023, inclusive of the company’s recent acquisition of TL broker MoLo Solutions. He has the stock rated at “overweight” as it trades at a much lower valuation multiple than its peers.

“Despite its group-leading stock performance, ARCB still screens extremely inexpensive on a relative basis (roughly half the multiple of ODFL and SAIA),” Shanker said.