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Will Coronavirus Woes Hurt Old Dominion's (ODFL) Q2 Earnings?

Old Dominion Freight Line ODFL is scheduled to report second-quarter 2020 results on Jul 30, before market open.

The Zacks Consensus Estimate for second-quarter 2020 earnings has been revised upward by 2% in the past 60 days. Moreover, it has an impressive earnings history. The company’s earnings have outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missed the same in one). Old Dominion has a trailing four-quarter earnings surprise of 0.16%, on average.

Let’s discuss the factors that are likely to have made an impact on the company’s performance in the quarter to be reported.

Old Dominion’s second-quarter performance is likely to have been dented by decline in LTL (Less-Than-Truckload) tonnage, thanks to  soft freight environment. The Zacks Consensus Estimate for second-quarter LTL tonnage per day indicates a decline of 9.7% from the year-ago quarter’s reported figure. Due to the pandemic, LTL shipments are also likely to have declined during the June-end quarter. Supply-chain disruptions stemming from the COVID-19 are likely to have exerted pressure on the company’s second-quarter performance as well. 

Operating ratio (operating expenses as a percentage of revenues) is likely to have suffered in the to-be-reported quarter mainly due to lackluster revenues. The Zacks Consensus Estimate for second-quarter operating ratio is pegged at 82%, which calls for a rise from 81% reported in the March-end quarter. Notably, a lower value bodes well.

LTL revenue per hundredweight is also likely to have declined in the second quarter partly owing to declining revenue per day. Evidently, the Zacks Consensus Estimate for second-quarter LTL revenue per hundredweight suggests 7.8% decline sequentially.

Old Dominion Freight Line, Inc. Price and EPS Surprise

Old Dominion Freight Line, Inc. Price and EPS Surprise

Old Dominion Freight Line, Inc. price-eps-surprise | Old Dominion Freight Line, Inc. Quote

Nevertheless, low fuel costs might have had a positive impact on the bottom line in the to-be-reported quarter.

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Old Dominion this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Old Dominion has an Earnings ESP of -2.00% as the Most Accurate Estimate is pegged at $1.02, lower than the Zacks Consensus Estimate of $1.04. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Old Dominion carries a Zacks Rank #3, currently.

Highlights of Q1 Earnings

Old Dominion Freight Line’s earnings per share of $1.11 were in line with the Zacks Consensus Estimate. Meanwhile, the bottom line inched up 1.8% year over year, mainly owing to lower operating expenses. Revenues came in at $987.4 million, which missed the Zacks Consensus Estimate of $989.8 million. The top line also dipped marginally on a year-over-year basis, due to a 3.9% fall in LTL (Less-Than-Truckload) tons per day as a result of a soft freight environment.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Air Lease Corporation AL, C.H. Robinson Worldwide CHRW and Expeditors International of Washington EXPD as these stocks possess the right combination of elements to beat on earnings.

Air Lease has an Earnings ESP of +23.32% and a Zacks Rank of 3. The company will announce second-quarter earnings numbers on Aug 6.

C.H. Robinson has an Earnings ESP of +6.02% and is a #3 Ranked player at present. The company will release second-quarter 2020 results on Jul 28.

Expeditors has an Earnings ESP of +6.87% and a Zacks Rank #3. The company will release second-quarter financial numbers on Aug 4.

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Old Dominion Freight Line, Inc. (ODFL): Free Stock Analysis Report

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