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Echo Global Logistics (NASDAQ:ECHO) offers complete shipping services to its customers by seamlessly merging all modes of transportation as needed. Integrating technology solutions, utilizing a network of 24,000 transportation carriers and accessing dedicated support professionals, Echo offers quality service while providing savings on their shipping costs.

As initially outlined, Echo Global set two lofty goals in 2011. Its five-year objectives included annual revenue of $1.3 to $1.5 billion and operating margins of 30% to 35%. Assuming a balanced spread across quarters, revenue must average $325 million to $375 million. As a reference point on Echo's progress, two years into the plan, 2012 total annual revenue topped the halfway point at $757.7 million.

After market close on April 25th, for the first quarter of 2013, Echo reported a striking 21% year-over-year increase in revenue at $204 million. This tracked a bit short of where it should be to meet the targeted quarterly average of $325 million. At a consistent growth rate, quarterly revenue for the third year of the plan should be falling in the range of $208 million to $226 million.

Operating margin was 14.6%, dramatically off from the goal, but also off from the previous year's rate of 15.4% and the previous quarter's 17.3%. The lowered margin resulted in a one cent miss for Echo, its third quarterly miss in a row. Even more concerning, while blaming a "sluggish overall economic climate", management lowered full-year guidance.

Revenue projections were lowered 4% from $940 - $980 million to $900 - $940 million. Full-year EPS guidance was lowered 5% to 7% from $0.82 - $0.90 to $0.78 - $0.84. The price had reached a 52 week high of $22.25 in late March. The 50-day moving average was $20.59. But revised guidance dropped the stock price back to December 2012 levels, 20% off its high and 13% off the 50-day moving average.

The key to Echo's success hinges on its ability to grow through acquisitions. The last one in October, 2012 of Sharp Freight Systems provided $18.5 million in revenue for the fourth quarter. In the first quarter of 2013, Echo Global announced the acquisition of Open Mile. However, Open Mile was a non-asset transportation service provider. While integration should enhance Echo Global's technology solutions, expectations for a revenue increase were not iterated.

Sure, the gain Echo had achieved from December 2012 to late March was basically wiped out as the market digested 2013's first quarterly report. Sure, management is resetting expectations for the full year. How does an investor determine if Echo Global's stock price is echoing disappointment or opportunity?

The domestic freight transportation industry is expected to be a $750 billion industry by 2022 - a staggering 60% increase. Of that total, $100 billion is slated toward demand for middle market businesses. At year-end 2012, Echo's share of the total market was less than 1% at only 0.22%. Echo excels at targeting that middle market client - the one who is too small for the large provider yet too complicated to go it alone.

Echo did grow revenue by 21% in the first quarter - at a time when many analysts and experts are concerned companies are not increasing revenue. Echo makes no secret it intends to grow through acquisitions and there's still plenty of time in 2013 to execute in that arena. And, since acquisitions take capital, Echo's cash build to $44 million is an important asset. While long-term EPS growth estimates are 32%, even if Echo maintained an annual growth rate of 21%, it would meet its five-year objective for revenue. As well, any improvement in operating margin will benefit earnings per share.

Echo's first sounds of 2013 may have been akin to a tinkling cymbal. But, from a long-term perspective, Echo should have plenty more noise to make, and pleasant noise at that.

Source: Echo Global Logistics: Echoing Disappointment Or Opportunity?

Additional disclosure: I intend to recommend ECHO to my investment club at the May meeting.