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Old Dominion (ODFL) Beats on Q4 Earnings, Hikes Dividend

Zacks Equity Research

Old Dominion Freight Line (ODFL) reported fourth-quarter 2018 earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate of $1.74. Meanwhile, quarterly revenues of $1,026.9 million exceeded the consensus mark of $1,018.2 million and increased 15.2% on a year-over-year basis. Top-line growth was primarily driven by a 2.9% and 12.9% increase in less-than-truckload (LTL) tons and LTL revenue per hundredweight, respectively.

In the quarter under review, LTL revenue per hundredweight was up 10.8%, excluding fuel surcharges. Also, LTL shipments improved 9.2%. However, LTL weight per shipment declined 3.3%.

Additionally, operating ratio (operating expenses as a percentage of revenues) improved 520 basis points (bps) to 78.7% on the back of greater efficiencies. On the flip side, effective tax rate in the quarter under review declined to 26.6%. For 2018, the metric came in at 25.7%. The company expects effective tax rate to be 26% in 2019.

Old Dominion Freight Line, Inc. Price, Consensus and EPS Surprise

 

Old Dominion Freight Line, Inc. Price, Consensus and EPS Surprise | Old Dominion Freight Line, Inc. Quote

Old Dominion, carrying a Zacks Rank #3 (Hold), exited the fourth quarter with cash and cash equivalents of $190.3 million. Debt-to-total capitalization ratio at the end of the quarter was 1.7% compared with 4% at the end of 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Capital expenditures in the quarter totaled $118.4 million. For 2018, the metric came in at $588.3 million. The company expects capital expenditures to be $490 million in 2019. Of the total amount, $220 million is anticipated to be spent on real estate and service center expansion while approximately $175 million and $95 million is estimated to be spent on tractors and trailers, and technology and other assets, respectively.

During the quarter, the company rewarded $97.2 million to shareholders through dividends and buybacks.  In 2018, the figure was $205.8 million, out of which $42.6 million and $163.2 million were paid via dividends and buybacks, respectively.

Dividend Hiked

Old Dominion’s board of directors hiked quarterly cash dividend by 30.8% to 17 cents per share (annual amount is 68 cents per share). The first installment of the new dividend is payable Mar 20, 2019, to its shareholders of record as of Mar 6.

 

Upcoming Releases

Investors interested in the Zacks Transportation sector are awaiting fourth-quarter 2018 earnings reports from key players like Aircastle Limited AYR, Copa Holdings CPA and Scorpio Tankers STNG. Aircastle, Copa Holdings and Scorpio Tankers will unveil their results on Feb 12, 13 and 14, respectively.

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