Bull of the Day: Rush Enterprises (RUSHA)

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Rush Enterprises (RUSHA) owns and operates the biggest network of commercial vehicle dealerships in the U.S., with over 100 locations in 22 states.

From Peterbilt heavy-duty trucks to John Deere (DE) construction equipment, its dealerships provide an integrated, one-stop source for new and used heavy-duty trucks and construction equipment; aftermarket parts, service and body shop facilities; and a wide array of financial services.

Rush was actually the first automotive or truck dealer to go public-its IPO was in 1996-and this Zacks Rank #1 (Strong Buy) stock could see huge gains going forward, especially in this current market environment.

Strong Third Quarter Results

Back in October, Rush reported strong third quarter results across the board.

Earnings came in at 72 cents a share, a record high for the company and soaring way past the Zacks Consensus of 48 cents per share. Net income was $29.8 million compared to $14.9 million reported in the year ago quarter.

Total revenues were $1.257 billion, also surpassing our consensus estimate and growing 14.7% year-over-year, while parts, service and body shop revenues increased 11.7% to $375.8 million.

U.S. Class 8 truck sales of 51,574 units jumped 11%, outpaced the broader industry, and accounted for 7.1% of the U.S. Class 8 truck market. The company's Class 4-7 medium-duty sales were also on the rise last quarter, spiking 14.5% to over 61,000 units.

Rush attributed this growth mainly to "increased activity from energy customers," and noted that vehicles sales remain "solid" in other industries like construction, refuse, and general freight, among others.

Rising Earnings Estimates

As a result, growth estimates have been steadily increasing, with analysts growing more and more bullish on RUSHA lately.

Earnings are expected to grow over 77% for the current quarter, and revenues could see growth of 17.4% in the same time frame.

As for the current year, year-over-year earnings growth sits at roughly 92%, with one analyst revising their estimate upwards in the last 60 days. The current consensus is $2.17 per share, up from $2.08 just two months ago.

This sentiment is even carrying over into next year, and Rush's earnings are projected to rise about 14.6%. The Zacks Consensus has jumped from $2.32 to $2.49 in the past 60 days.

Can the Rally Continue?

2017 was a good year for RUSHA, and over the past one year, shares have surged well over 57%.

Rush Enterprises, Inc. Price, Consensus and EPS Surprise

Rush Enterprises, Inc. Price, Consensus and EPS Surprise | Rush Enterprises, Inc. Quote

Rush is now trading with a forward P/E of 20.

And, it helps that the company is in a strong industry at the moment. Automotive-Retail and Wholesale sits in the top 19% of all industries that we cover, and returned nearly 11% over the last year.

2018 could be another strong year for the automotive retailer, and if customer demand remains solid and the company continues to advance their strategic initiatives, Rush looks to be an intriguing opportunity for investors.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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