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ODFL – Market expectations are for Uniform ROA to reach new peaks, but management may be concerned about shipment capacity, growth, and demand

June 22, 2021

  • Old Dominion Freight Line, Inc. (ODFL:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 31.2x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their capacity investments, revenue and shipments growth, and the sustainability of demand
  • Specifically, management may lack confidence in their ability to significantly invest in increasing capacity this year, sustain their revenue growth rate, and improve tonnage and shipments growth. Furthermore, they may be exaggerating the strength of their growth positioning within the less-than-load (LTL) industry, and they may have concerns about the sustainability of shipping demand. Management may also lack confidence in their ability to improve freight protection and manage line haul costs. Moreover, they may be concerned about pandemic-related pricing headwinds, and they may lack confidence in their ability to recover back to normal business operations