On January 13, Evercore ISI analyst Jonathan Chappell increased his price target for Old Dominion Freight Line, Inc. (NASDAQ:ODFL) to $150 from $139. He maintained an In Line rating on the stock. Chappell stated that much optimism around earnings per share growth over the next two years is already reflected in transport valuations. He also warned that further demand weakening could delay recovery and pressure earnings forecasts, potentially compressing valuation multiples.
Old Dominion shares have fallen more than 7% over the past 12 months. Freight demand has remained soft, and the company's model has faced challenges. In the third quarter, revenue decreased 4.3% year-over-year to $1.41 billion. Operating income dropped 10.2% to approximately $361 million, and earnings per share declined 10.5% to $1.28.
The primary factor was weaker shipment volume. Less-than-truckload tons per day fell 9% compared to the previous year. This resulted from a 7.9% decline in shipments per day and a 1.2% decrease in weight per shipment. Customers shipped fewer loads, and those shipments were slightly lighter.
Pricing provided some positive news. The company reported that LTL revenue per hundredweight, excluding fuel, rose 4.7% year-over-year. This metric indicates Old Dominion earned more per unit of freight despite lower volumes.
Management attributed pricing power to service quality. During the third-quarter earnings call, CEO Marty Freeman noted a 99% on-time performance rate and a cargo claims ratio of only 0.1%, indicating very low freight damage. He suggested such consistency makes customers willing to pay more for reliability.
Old Dominion Freight Line, Inc. is a leading less-than-truckload carrier offering regional and national LTL shipping services through a single integrated, non-union network.