Benchmark maintains Hold on Old Dominion stock, cuts FY estimates

On Thursday, Benchmark analyst Christopher Kuhn maintained a Hold rating on shares of Old Dominion Freight Line (NASDAQ:ODFL), following the company’s first-quarter earnings report. Old Dominion reported a decrease in earnings per share (EPS) to $1.19 for the first quarter of 2025, which is an 11% drop from the previous year but still slightly higher than Benchmark’s estimate of $1.15 and FactSet’s consensus of $1.14. According to InvestingPro data, 11 analysts have recently revised their earnings estimates downward for the upcoming period, while the company trades at a P/E ratio of 29x, suggesting a premium valuation compared to industry peers. The company’s revenue and EPS were affected by a challenging operating environment, yet lower costs led to a better-than-expected operating ratio (OR), contributing to the EPS surpassing expectations.

The freight company experienced an improvement in demand for its services, with tons per day in February and March aligning with normal sequential trends. However, there is a possibility that some volume was pulled forward into March. Due to Good Friday’s occurrence in April this year, the company anticipates a 6% decline in revenue per day for the month and expects a 5% year-over-year decrease for the second quarter, estimating total revenue around $1.4 billion. Despite these challenges, InvestingPro analysis shows the company maintains robust financial health with minimal debt and strong cash flows. Get access to 10+ additional ProTips and comprehensive financial metrics with InvestingPro. This forecast falls short of Benchmark’s projections and usual seasonal patterns.

Old Dominion’s expected sequential OR improvement of about 100 basis points in the second quarter is below both the 10-year average decrease of 300-350 basis points quarter over quarter and Benchmark’s estimate of a 300-basis point improvement. Despite these challenges, the company’s pricing remains robust, with management forecasting second-quarter revenue per hundredweight (rev/cwt) to increase by 5.0%-5.5% year-over-year, aligning with normal seasonality and surpassing Benchmark’s predictions.

In response to the uncertain market conditions, Old Dominion is reducing its capital expenditures for the fiscal year 2025 to $450 million from the previously planned $575 million by deferring real estate projects and equipment spending. While the analyst expresses confidence in Old Dominion’s ability to continue providing superior service and gaining market share in the long term, the firm has lowered its estimates for the second quarter and the fiscal years 2025 and 2026. The stock is currently trading near its 52-week low of $145.79, having declined 13% year-to-date. InvestingPro’s detailed analysis, including Fair Value estimates and comprehensive financial health scores, can help investors make informed decisions about ODFL’s current market position. Access the full Pro Research Report, available for 1,400+ US stocks, for in-depth analysis and actionable insights. Kuhn suggests that competitors XPO Logistics (NYSE:XPO) and Saia (NASDAQ:SAIA), both rated as Buy, may currently be better positioned to compete due to improved service and increased density, which could offer more operating leverage when demand rebounds.

In other recent news, Old Dominion Freight Line reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $1.19, which exceeded the forecast of $1.16. However, the company experienced a slight revenue shortfall, reporting $1.37 billion against the expected $1.38 billion, marking a 5.8% year-over-year decline. Despite the revenue miss, the company’s strong EPS performance suggests resilience in a challenging freight environment. Analyst firms have adjusted their outlooks in response to these results. BMO Capital Markets lowered its price target for Old Dominion from $186.00 to $175.00, citing ongoing demand challenges that may affect short-term performance, while maintaining a Market Perform rating. Similarly, Stephens reduced its price target from $200 to $180, maintaining an Overweight rating, and noted the company’s strategic advantage with excess capacity. Old Dominion has adjusted its capital expenditure budget downward, yet analysts remain optimistic about the company’s ability to support ongoing share repurchase programs through strong free cash flow generation. These developments reflect Old Dominion’s current strategic positioning and market conditions.

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