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Here's Why Hold Strategy is Apt for Werner (WERN) Stock Now

Zacks Equity Research

Amid the sluggish freight scenario, Werner Enterprises, Inc. WERN is taking measures to counteract this challenge. Moreover, the company is consistent in its efforts to improve operational efficiency and reduce fuel costs by maintaining a young fleet of trucks and trailers.

Factors Aiding the Company

To combat the softness in freight demand, the company is making efforts to lower costs, which in turn, is benefiting the bottom line. Evidently, Werner’s earnings increased 3.3% year over year in the second quarter of 2019. As of Jul 25, 2019, the company realized cost savings of $10 million. A further uptick is expected in this regard. Additionally, the company is believed to be witnessing improved efficiency and higher productivity on the back of its software advancements.

Werner is focused on investing in new trucks and trailers to improve operational efficiency and decrease fuel costs. To this end, it aims at maintaining a relatively young fleet of trucks and trailers compared with the industry’s standard. With steady fleet upgrade endeavors, the average age of the company’s truck fleet was 1.8 years as of Jun 30, 2019 compared with 1.9 years a year ago.

Further, the company’s efforts to add shareholder value via dividends and shares repurchases are noteworthy. It has a consistent track record of paying out dividends since 1987. The last dividend hike was in May 2018 when the company raised its quarterly dividend by 29% to 9 cents per share (36 cents annually). With regard to buybacks, the company repurchased 700,000 shares for $21.8 million during the second quarter. Last year, it bought back approximately 2.1 million shares worth $72 million. As of Jun 30, 2019, it had 4.3 million shares remaining under its current buyback program.

Shares of the company have gained 7.5% so far this year on the back of the above positives.


 

In light of the optimism, we believe, investors should retain this Zacks Rank #3 (Hold) stock in their portfolios at the moment.

Key Picks

Some better-ranked stocks in the broader Transportation sector are Marten Transport, Ltd. MRTN, Canadian National Railway Company CNI and Canadian Pacific Railway Limited CP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Marten, Canadian National and Canadian Pacific have rallied more than 21%, 24% and 34% so far this year, respectively.

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Canadian National Railway Company (CNI) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Marten Transport, Ltd. (MRTN) : Free Stock Analysis Report
 
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
 
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