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Summary

  • The company managed to beat on the top and bottom lines.
  • We still have a long-term bullish outlook on the company given the rising economy, but the price may no longer be right.
  • We expected the company to post a solid quarter thanks to improving operational efficiencies.

Old Dominion Freight Line (NASDAQ:ODFL) posted 2Q earnings of $0.86 (beating $0.83 consensus) and revenues came in at $703 million (topping $692 million consensus). The company continues to hit on all cylinders, with 2Q operating ratio coming in at 82.5%, the best ever for the company. And its on-time delivery performance was 99% for the quarter.

Shares are up 47% since we first covered the stock back in July of last year. The stock is now trading right at our fair value estimate. Its EV/EBITDA multiple is also up to a more reasonable 11.3x. We think now's a good time to take profits and give the company a chance to implement some long-term initiatives to accelerate long-term growth. As we noted last July,

The company also has a $3 billion revenue target that it plans to hit by either 2015 or 2016. By our estimates, which in most cases are conservative, the company will generate $2.7 billion in revenue in 2015.

Wall Street consensus has the company hitting $3 billion in revenues for 2015 and EPS is expected to grow 17% y/y to $3.44.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Old Dominion Freight Line Earnings