Old Dominion Freight Faces Challenges Amid Market Gains
Thomasville’s Old Dominion Freight Line, Inc. (ODFL) Struggles to Keep Up with Larger Market Trends
Based in Thomasville, North Carolina, Old Dominion Freight Line, Inc. (ODFL) stands as one of the most significant less-than-truckload (LTL) motor carriers across North America. They offer comprehensive regional, inter-regional, and national LTL services. With a market capitalization of $46 billion, their services also encompass container drayage, truckload brokerage, and supply chain consulting.
Over the past year, however, the company has not performed as well as the overall market. The stock price for Old Dominion has increased by 6.4% year-to-date (YTD) and 7.1% over the last year. Unfortunately, this lags behind the S&P 500 Index’s gains of 23.1% in 2024 and 30.4% in the past year.
When looking specifically at the transportation sector, ODFL’s performance is also underwhelming. It has trailed behind the SPDR S&P Transportation ETF’s (XTN) YTD gains of 9.7% and a year-over-year increase of 24.6%.
On October 23, shares of Old Dominion fell by 5.5% following the release of disappointing third-quarter earnings. The company reported a total revenue of $1.5 billion, a decrease of 3% compared to the same quarter last year, falling short of Wall Street’s expectations by 2.8%. This decline was primarily due to a 4.8% drop in LTL tons per day, although it was somewhat mitigated by a 1.5% rise in LTL revenue per hundredweight. Additionally, net income fell 9.1% year-over-year to $308.6 million, attributed to rising operating expenses relative to revenues.
Despite these challenges, ODFL managed to report an earnings per share (EPS) of $1.43, matching analysts’ forecasts. The company’s market share and yield performance remain stable, backed by reliable service that boasts a 99% on-time delivery rate and a mere 0.1% cargo claims ratio for the quarter.
Looking ahead, analysts predict a 3.6% decline in EPS to $5.43 for the current fiscal year ending in December. Notably, Old Dominion has a strong record of exceeding or meeting earnings expectations, having done so for the last four quarters.
Currently, ODFL holds a consensus “Hold” rating among analysts. Out of 20 analysts monitoring the stock, three recommend a “Strong Buy,” one suggests a “Moderate Buy,” while 14 propose holding the stock and two call for a “Strong Sell” rating.
This sentiment has softened over the past month; previously, five analysts had endorsed a “Strong Buy” rating.
On November 13, Barclays PLC (BCS) analyst Eric Morgan maintained an “Equal Weight” rating while raising the price target for ODFL to $220.
Although ODFL’s share price currently exceeds its average price target of $197.05, the highest target set by analysts at $241 indicates an upside potential of 11.8% based on current market conditions.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
