The trucking industry serves as a critical component of global transportation, facilitating the movement of goods and materials across vast distances. Trucks are responsible for delivering goods to consumers, restocking store shelves, and supporting industries such as manufacturing, agriculture, and construction.
This sector plays a vital role in the supply chain, ensuring the timely and efficient delivery of products that drive economic growth. Given this backdrop, it could be wise to invest in the shares of P.A.M. Transportation Services, Inc. (PTSI) and Daseke, Inc. (DSKE), which seem well-positioned to drive your portfolio forward.
Despite its importance, rising fuel costs, regulatory compliance, and driver shortages have dented the trucking sector. However, advancements in technology and changes in consumer spending, like the prevalence of e-commerce, are offering potential solutions to these challenges, paving the way for a more sustainable and efficient future for the trucking industry.
As of 2023, the trucking sector is responsible for moving 72.5% of all freight in America, and it is assumed that it would only take three days for grocery stores to be out of stock if trucks stopped driving, underscoring the importance of this sector.
Furthermore, the global market for freight trucking is projected to reach a revised size of $3.4 trillion by 2030, growing at a CAGR of 5.4%. Given these factors, PTSI and DSKE seem well-positioned to capitalize on the industry’s long-term prospects.
P.A.M. Transportation Services, Inc. (PTSI)
PTSI is a holding company that engages in the provision of truckload transportation and logistics services through its subsidiaries. The company operates a truckload dry van carrier that transports general commodities.
PTSI’s operating revenue increased marginally year-over-year to $221.72 million in the first quarter (ended March 31, 2023), while its adjusted net income and non-GAAP EPS came in at $12.66 million and $0.57, respectively.
During the same period, its total current assets and cash and cash equivalents amounted to $293.83 million and $92.47 million, up 4.3% and 24.8% compared to $280.77 million and $74.09 million as of December 31, 2022, respectively.
Analysts expect PTSI’s EPS and revenue to increase 29.4% and 7.2% year-over-year to $3.30 and $963.10 million for the fiscal year ending June 30, 2023. Its EPS is expected to increase by 20% per annum over the next five years. Additionally, the stock has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
Its revenue and EBIT have grown at 22.6% and 93.8% CAGRs over the past three years, respectively. Over the same period, its EBITDA increased at a CAGR of 32.5%.
The stock’s trailing-12-month ROTA of 9.67% is 90.8% higher than the industry average of 5.07%. Also, its trailing-12-month levered FCF margin and ROCE of 7.38% and 26.69% are 43.4% and 92.9% higher than the 5.15% and 13.83% industry averages, respectively.
PTSI’s shares have gained 2% over the past five days to close the last trading session at $23.30.
PTSI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value. In the 20-stock Trucking Freight industry, it is ranked first. To see additional POWR Ratings of PTSI for Growth, Momentum, Stability, Sentiment, and Quality, click here.
Daseke, Inc. (DSKE)
DSKE is engaged in providing transportation and logistics solutions through two segments: Flatbed Solutions; and Specialized Solutions. The company transports aircraft parts, manufacturing equipment, structural steel, pressure vessels, wind turbine blades, commercial glass, high-security cargo, industrial and hazardous waste, etc.
For the first quarter that ended March 31, 2023, DSKE’s total operating expenses decreased 3.7% year-over-year to $387.90 million. Its cash flow from operating activities grew 6.2% from the year-ago value to $31 million. Also, its free cash flow increased 5.6% from the prior-year quarter to $33.70 million.
As of March 31, 2023, its total current assets and cash and cash equivalents amounted to $379.90 million and $161.30 million, representing an increase of 0.4% and 5.1% compared to $378.20 million and $153.40 million for the period that ended December 31, 2022, respectively.
Street expects DSKE’s EPS to increase 23.5% year-over-year to $0.21 in the third quarter (ending September 2023), while its revenue is expected to be $425.53 million in the same period. Its EPS is expected to increase by 25% per annum over the next five years.
DSKE’s EBITDA and levered FCF have increased at CAGRs of 9.3% and 7.3%, respectively, over the past three years, while its EBIT has improved at a 120.3% CAGR.
In terms of trailing-12-month ROCE, its 31.12% is 125% higher than the 13.83% industry average. In addition, its trailing-12-month levered FCF margin of 5.48% compares to the industry average of 5.15%.
The stock has lost 2.9% year-to-date to close the last trading session at $5.52.
DSKE’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Value. Within the same industry, it is ranked #2. Click here to see the additional ratings for DSKE (Growth, Momentum, Stability, Sentiment, and Quality).
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PTSI shares were trading at $23.31 per share on Wednesday afternoon, up $0.01 (+0.04%). Year-to-date, PTSI has declined -10.00%, versus a 8.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
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