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On Wednesday, Benchmark analysts held steady on their rating for Old Dominion Freight Line (NASDAQ:ODFL) with a Hold position, maintaining their stance on the company's financial outlook. The stock, currently trading at $147.94, has declined nearly 13% in the past week. According to InvestingPro data, seven analysts have recently revised their earnings estimates downward for the upcoming period. The transportation firm's first quarter less-than-truckload (LTL) operating data reportedly showed revenue per hundredweight excluding fuel surcharges increased by 4.3%, slightly higher than Benchmark's projection of 4.1%. Tonnage for January and February matched the analysts' predictions, both showing a 7.1% decline. With a market capitalization of $31.6 billion and trailing twelve-month revenue of $5.8 billion, ODFL maintains strong profitability with a gross margin of 40%.
Despite the lower-than-usual volume in January, which analysts attribute potentially to weather conditions, February volumes exceeded expectations. However, the analysts anticipate that the seasonal surge commonly seen in March may not meet typical levels this year. Even so, Benchmark expects Old Dominion's first-quarter revenue to align closely with the company's projected range between $1.34 billion and $1.38 billion, which concurs with their own estimates. For deeper insights into ODFL's financial health and future prospects, InvestingPro subscribers can access comprehensive analysis and 12 additional ProTips.
The operating ratio (OR), a key metric for efficiency in the transportation industry, is also predicted to deteriorate within a range of 0 to 50 basis points sequentially, aligning with Benchmark's estimate of a 22 basis point increase. The yield excluding fuel has risen by 4.3%, or 2.6% when including fuel costs, which slightly surpasses Benchmark's expectations. This is attributed to Old Dominion's consistent approach to disciplined pricing.
However, due to the ongoing trend of below-normal seasonal volumes, Benchmark has revised its fiscal year 2025 and 2026 estimates for Old Dominion. Despite this adjustment, analysts have opted to maintain the Hold rating on the stock. They express a preference for competitors with Buy ratings, such as SAIA and XPO, while acknowledging that the risk/reward balance for LTL companies will largely depend on the likelihood of an economic recession.
In other recent news, Old Dominion Freight Line reported its fourth-quarter earnings for 2024, which exceeded analyst expectations despite a year-over-year decline. The company announced an earnings per share (EPS) of $1.23, surpassing both BofA Securities' estimate of $1.15 and the consensus estimate of $1.16. Revenue for the quarter was $1.39 billion, aligning with forecasts but reflecting a 7.3% decrease from the previous year. Following the earnings release, Stifel upgraded Old Dominion's stock rating to Buy, with a new price target of $200, citing the company's strong fundamentals and market conditions favorable for growth.
Meanwhile, BofA Securities raised its price target for Old Dominion to $208, maintaining a Neutral rating, while Citi adjusted its target to $205, also keeping a Neutral stance. Both firms acknowledged the company's better-than-expected performance and operating ratio improvements. Morgan Stanley (NYSE:MS) increased its price target to $170 and retained an Equalweight rating, noting that Old Dominion's results were consistent with expectations and highlighted a balanced risk-reward scenario. These developments indicate a cautiously optimistic outlook among analysts regarding Old Dominion's ability to navigate the current economic environment and maintain its competitive position in the transportation and logistics sector.
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