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Old Dominion (ODFL) Up 12.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Old Dominion Freight Line (ODFL). Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Old Dominion due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Old Dominion in Q3

ODFL's earnings per share of $3.36 outpaced the Zacks Consensus Estimate of $3.06. The bottom line increased 36% year over year. Revenues of $1,603.7 million lagged the Zacks Consensus Estimate of $1,615.1 million but increased 14.5% year over year. The uptick was backed by a 17.4% increase in less-than-truckload revenue per hundredweight, partially offset by the 2.6% decrease in LTL tons.

The LTL services unit logged a total of $1,582.95 million, up 14.8% year over year. Revenues from other services fell 4.5% to $20.74 million. In the quarter under review, LTL weight per shipment rose 1.5%, while LTL revenue per shipment rose 19.2%. LTL shipments and LTL shipments per day were down 4.1% each year over year.

Total operating expenses moved up 8.9% to $1.11 billion. Operating income improved 29.4% to $496.08 million. Old Dominion exited the third quarter with cash and cash equivalents worth $216.73 million compared with $196.13 million at the end of June 2022. Long-term debt of $79.95 million was flat sequentially.

During the reported quarter, Old Dominion paid out dividends worth $33.4 million and repurchased shares worth $368.1 million. ODFL generated $514.2 million of net cash from operating activities. Capital expenditures incurred in the reported quarter were $181.7 million.

Old Dominion now expects a capex of $720 million for 2022 compared with the prior expectation of $835 million. Of the total, $300 million is still anticipated to be invested in real estate and service-center expansion. However, ODFL now expects to spend $350 million on tractors/trailers (prior view: $485 million) and $70 million (prior view: $50 million) on information technology and other assets, respectively.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Old Dominion has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Old Dominion has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Old Dominion belongs to the Zacks Transportation - Truck industry. Another stock from the same industry, Landstar System (LSTR), has gained 14.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Landstar reported revenues of $1.82 billion in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $2.76 for the same period compares with $2.58 a year ago.

For the current quarter, Landstar is expected to post earnings of $2.61 per share, indicating a change of -12.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Landstar. Also, the stock has a VGM Score of A.

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Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report

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