Yahoo Finance Werner (WERN) Gains From Segmental Growth Despite Expenses
Shares of Werner Enterprises, Inc. WERN have gained 10% over the past six months.
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Werner’s bullish guidance for 2022 looks encouraging. Werner anticipates Truckload Transportation Services' (TTS) growth of 3-5% (vs prior mentioned 2-5% growth) for 2022 from the year-ago quarter’s reported figure. Under the TTS guidance, WERN estimates Dedicated revenues per truck per week to increase 6-8% in 2022, owing to expectations of strong rates.
Werner expects the truck age to be 2.3 years (vs prior stated 2.2 years) for 2022 (commensurate with 2021), while the 2022 trailer age is forecast to be five years (vs prior stated 4.8 years). The effective income tax rate is expected to be 24.5-25.5%.
Strength across the TTS and Logistics segments aids Werner’s top-line growth. Werner’s efforts to boost its shareholder value via dividend payouts and share repurchases are commendable. In third-quarter 2022, Werner repurchased 215,204 shares for $8.3 million. As of Sep 30, 2022, WERN had 2.3 million shares available under its share repurchase authorization.
On the flip side, rising operating expenses raise concerns for Werner. In third-quarter 2022, total operating expenses (on a reported basis) increased 18.9% to $751.35 million. The metric was primarily driven by increased salaries, wages and benefits (up 12.9%), fuel (up 73.1%), and rent and purchased transportation expenses (up 16.4%). If operating expenses continue to rise in the coming quarters, bottom-line growth is likely to be severely hampered.
A debt-laden balance sheet remains another concern. Werner exited the third quarter of 2022 with cash and cash equivalents of $125.68 million, way below the long-term debt (net of the current portion) of $568.75 million. This implies that the company does not have enough cash to meet its debt levels.
Zacks Rank & Stocks to Consider
Currently, Werner carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the broader Zacks Transportation sector are United Airlines Holdings, Inc. (UAL), Ryder Systems (R) and Teekay Tankers Ltd. (TNK),each currently carrying a Zacks Rank #2 (Buy).
UAL has an expected earnings growth rate of 115.64% for the current year. UAL delivered a trailing four-quarter earnings surprise of 7.78%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved more than 100% over the past 90 days. Shares of UAL have declined 7.6% over the past year.
Ryder has an expected earnings growth rate of 67.12% for the current year. R delivered a trailing four-quarter earnings surprise of 30.13%, on average.
The Zacks Consensus Estimate for R’s current-year earnings has improved 6.9% over the past 90 days. Shares of R have gained 10.1% over the past year.
Teekay Tankers has an expected earnings growth rate of 214.91% for the current year. TNK delivered a trailing four-quarter earnings surprise of 42.23%, on average. Teekay Tankers has a long-term expected growth rate of 3%.
The Zacks Consensus Estimate for TNK’s current-year earnings has improved 95% over the past 90 days. Shares of TNK have soared 188.5% over the past year.
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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
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Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
