The trucking industry is facing a worsening labor-shortage issue. The federal COVID-19 vaccine mandate did not go down well with most trucking associations amid record-high driver shortages. However, according to Labor Secretary Marty Walsh, “The ironic thing is most truckers are not covered by this, because they’re driving a truck, they’re in a cab, they’re by themselves, they wouldn’t be covered by this.” This re-assurance has paved the way for some optimism in the industry. And investors’ interest in trucking stocks is partly evident in the SPDR S&P Transportation ETF’s (XTN) 5.8% gains over the past month versus the SPDR S&P 500 ETF’s (SPY) 3.2% returns.
President Biden’s $1.2 trillion infrastructure spending is expected to rescue the country’s ailing transportation systems, which has fostered a positive outlook on the trucking industry. With trucks predicted to be the predominant freight carriers in the future, the U.S. Department of Transportation’s Bureau of Transportation Statistics and Federal Highway Administration recently estimated that U.S. freight activity would surge by 50% in tonnage to 28.7 billion tons between 2020 – 2050.
Given this backdrop, we think it could be wise to bet on fundamentally strong trucking stocks TFI International Inc. (TFII), Schneider National, Inc. (SNDR), ArcBest Corporation (ARCB), and Marten Transport, Ltd. (MRTN).
TFI International Inc. (TFII)
Headquartered in Saint-Laurent, Canada, TFII provides transportation and logistics services in the United States, Canada, and Mexico. The company operates through Package and Courier; Less-Than-Truckload (LTL); Truckload (TL); and Logistics segments.
On October 28, 2021, Alain Bédard, Chairman, President, and CEO, said, “I’m particularly pleased that our strong performance comes at a time when the most compelling benefits from our pivotal acquisition of UPS Freight are still ahead, and yet, firmly within grasp as the newly branded TForce Freight, continues to exceed expectations under the TFI umbrella.”
For its fiscal third quarter, ended September 30, 2021, TFII’s total revenue increased 123.7% year-over-year to $2.09 billion. The company’s adjusted net income came in at $138.90 million, up 58.9% year-over-year. Also, its adjusted EPS was $1.46, up 55.3% year-over-year, and its adjusted EBITDA came in at $296.40 million, up 56.5% year-over-year.
TFII’s revenue is expected to be $7.04 billion in its fiscal year 2021, representing an 86.1% year-over-year rise. The company’s EPS is expected to grow at 48.6% in fiscal 2021 to $4.90. Also, it surpassed the Street’s EPS estimates in each of its four trailing quarters. Over the past nine months, the stock has gained 52% in price to close yesterday’s trading session at $110.24.
It is no surprise that TFII has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. In addition, it has a B grade for Momentum and Sentiment.
Schneider National, Inc. (SNDR)
SNDR, in Green Bay, Wis., is a surface transportation and logistics solutions company that provides truckload, intermodal, and logistics services in North America. Its segments are Truckload; Intermodal; and Logistics.
On August 31, 2021, SNDR announced a major battery-electric truck deployment as part of the carrier’s plan to reduce greenhouse emissions. SNDR’s President and CEO Mark Rourke said, “Schneider’s sustainability initiatives got a big boost when we were selected to participate in the state of California’s Joint Electric Truck Scaling Initiative. The scaling of zero-emission vehicles is a key component of our goal to reduce carbon emissions by 7.5% per mile by 2025 and by 60% per mile by 2035.”
SNDR’s operating revenues were $1.44 billion for its fiscal third quarter, ended September 30, 2021, up 27.2% year-over-year. Its adjusted income from operations came in at $153.70 million, up 99.9% year-over-year. Its net income came in at $110 million, up 147.2% year-over-year. And its EPS increased 148% year-over-year to $0.62.
SNDR’s revenue is expected to increase to $5.55 billion, at the rate of 21.9% in fiscal 2021. Its EPS is expected to rise at the rate of 72.8% to $2.16 in the current year. The stock surpassed the Street’s EPS estimates in each of its four trailing quarters. Over the past nine months, the stock has gained 10.8% in price to close yesterday’s trading session at $25.79.
SNDR has an overall B rating, which translates to a Buy in our POWR Ratings system. It has a B rating for Value, Momentum, and Sentiment. It is ranked #4 in the Trucking Freight industry. Click here to see the additional POWR Rating for SNDR (Stability, Growth, and Quality).
ArcBest Corporation (ARCB)
Fort Smith, Ariz.-based ARCB is a leading logistics company with creative problem solvers delivering innovative solutions, including freight transportation and integrated logistics services. It operates through three segments: Asset-Based; ArcBest; and FleetNet.
On September 29, 2021, ARCB announced an agreement to acquire MoLo Solutions, LLC, a Chicago-based truckload freight brokerage. With the acquisition, ARCB is set to be among the top 15 U.S. truckload brokers, with access to more than 70,000 carrier partners.
ARCB’s revenues increased 27.9% year-over-year to $1.02 billion in the third quarter, ended September 30, 2021. Its net income came in at $63.69 million, up 116.6% year-over-year. Its EPS also increased 114.4% year-over-year to $2.38.
Analysts expect ARCB’s revenue and EPS to increase 32.5% and 140.9%, respectively, year-over-year to $3.90 billion and $7.78 in the current year. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 93.9% in price to close yesterday’s trading session at $109.50.
ARCB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
Marten Transport, Ltd. (MRTN)
MRTN operates as a temperature-sensitive truckload carrier for shippers in the United States, Canada, and Mexico. The Mondovi, Wisc.-based concern operates through four segments: Truckload; Dedicated; Intermodal; and Brokerage.
On October 19, 2021, Executive Chairman Randolph L. Marten said, “With our peoples’ smart, hard work, we began the fourth quarter with 181 more of the industry’s top drivers than we employed at the beginning of the third quarter. Additionally, we increased our number of refrigerated containers by 53 during the third quarter, expanding our fleet to 607 containers at September 30th.”
MRTN’s operating revenue increased 16.3% year-over-year to $251.28 million for its fiscal third quarter, ended September 30, 2021. Its operating income came in at $28.5 million, up 16.8% year-over-year. Its net income was $21.27 million, up 17.9% from the year-ago period, while its EPS increased 18.2% year-over-year to $0.26.
For its fiscal 2021, MRTN’s revenue and EPS are expected to rise 9.8% and 20.7%, respectively, year-over-year to $960.43 million and $0.99. It has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 3.3% in price to close yesterday’s trading session at $17.17.
MRTN’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
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TFII shares were unchanged in premarket trading Tuesday. Year-to-date, TFII has gained 115.30%, versus a 26.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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