Why Is Werner (WERN) Up 3.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Werner Enterprises (WERN). Shares have added about 3.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Werner due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Werner Enterprises in Q1

Werner reported first-quarter 2021 earnings of 68 cents per share, which surpassed the Zacks Consensus Estimate of 63 cents. Moreover, the bottom line surged 70% year over year. Reduced operating expenses aided the bottom line.

Total revenues of $616.4 million outperformed the Zacks Consensus Estimate of $616.1 million. The top line inched up 4% on a year-over-year basis. The uptick can be primarily attributed to Logistics revenues growth.

Operating income (adjusted) came in at $62.7 million in the reported quarter, up 68% year over year. Moreover, adjusted operating margin increased 390 basis points (bps) to 10.2%. Operating expenses dropped 1.4% to $553.97 million.

Segmental Results

Truckload Transportation Services (“TTS”) segment’s revenues declined marginally on a year-over-year basis to $462.94 million. The downside was caused by 7% fall in fuel surcharge revenues and 0.9% decline in average trucks in service. Adjusted operating income surged 67% to $58.88 million.  Additionally, adjusted operating margin expanded 510 bps to 12.7%. Adjusted operating ratio (operating expenses, as a percentage of revenues) improved 510 bps to 87.3%. Notably, lower the value of the metric, the better.

Werner Logistics segment’s revenues totaled $137.85 million, up 23% year over year due to 23% rise in intermodal logistics volume. The segment reported operating income of $4.57 million, skyrocketing more than 100% from the year-ago quarter’s levels. Further, operating margin was 3.3%, up 230 bps from first-quarter 2020 levels. The Other segment accounted for the rest of the top line.

Liquidity

As of Mar 31, 20201 Werner had cash and cash equivalents of $83.13 million compared with $29.33 million at 2020 end. Long-term debt (net of current portion) totaled $175 million at the end of the first quarter, flat compared with 2020-end reported figure.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Werner has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Werner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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