Werner Enterprises (WERN) Stock Up 3% Since Q3 Earnings

Werner Enterprises, Inc. WERN stock has gained 3% since its third-quarter 2022 earnings release on Nov 2.

Quarterly earnings of 90 cents per share missed the Zacks Consensus Estimate of 97 cents. However, the bottom line rose 14% on a year-over-year basis.

Total revenues of $827.6 million outperformed the Zacks Consensus Estimate of $819.8 million. The top line increased 18% on a year-over-year basis, primarily on higher revenues in the Truckload Transportation Services (TTS) and Logistics segments.

Operating income (adjusted) came in at $79.45 million in the reported quarter, up 8% year over year. Adjusted operating margin fell 90 basis points (bps) to 9.6%. Operating expenses rose 18.9% to $751.35 million in the reported quarter.

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

Werner Enterprises, Inc. price-consensus-eps-surprise-chart | Werner Enterprises, Inc. Quote

Segmental Results

Revenues in the TTS segment increased 18% on a year-over-year basis to $621.86 million on the back of solid freight demand. Adjusted operating income increased 17% to $76.34 million. Adjusted operating margin fell 10 bps to 12.3%. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 10 bps to 87.7%.

The Logistics segment’s revenues totaled $187.13 million, up 18% year over year. The segment reported an adjusted operating income of $5.65 million, down 26% year over year. Adjusted operating margin fell 180 bps to 3%.

Liquidity

As of Sep 30, 2022, Werner had cash and cash equivalents of $125.68 million compared with $54.42 million at the end of June 2022. Long-term debt (net of current portion) totaled $568.75 million at the end of the reported quarter compared with $440 million at the end of June 2022.

The company generated $65.2 million of cash from operations in third-quarter 2022. Capital expenditures came in at $100.6 million.

During the reported quarter, Werner repurchased 215,204 shares for a total cost of $8.3 million. As of Sep 30, 2022, WERN had 2.3 million shares available under its share repurchase authorization.

Outlook

Werner now anticipates TTS truck growth of 3-5% (prior view: 2-5%) for 2022 from the year-ago quarter’s reported figure. Net capital expenditures are estimated to be in the band of $300-$325 million (previous view: $275-$325 million).

Under the TTS guidance, WERN continues to estimate Dedicated revenue per truck per week to increase 6-8% in 2022, owing to expectations of strong rates. The effective income tax rate is still expected to be at 24.5-25.5%.

One-way Truckload revenues per total mile are now predicted to be flat to down 3% (previous outlook: up 2-5%). Werner expects the truck age to be 2.3 years (prior view: 2.2 years) for 2022 (commensurate with 2021), while the 2022 trailer age is forecasted to be five years (prior view: 4.8 years).

Currently, Werner carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by the high air-travel demand, total revenues increased more than 52% on a year-over-year basis.

United Airlines’ UAL third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. An upbeat in air-travel demand aided results. In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.

Operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an upbeat in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.

J.B. Hunt Transport Services, Inc. JBHTreported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.JBHT’squarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.

Total operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across — Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.

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