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  • Can Arkansas Best Corporation Continue With Its Current Run? 0 comments
    Dec 14, 2013 8:36 AM | about stocks: YRCW, ARCB

    Experts expect a bull market and unemployment rates are dropping to under 8 percent. Although the government will continue to under invest in the transportation industry, it should still be a profitable year for transportation professionals. Companies like Arkansas Best Corporation (NASDAQ: ABFS) and YRC Worldwide, Inc. (NASDAQ: YRCW) are set to profit from the situation. While the latter provides various transportation services primarily in North America, Arkansas Best Corporation's business has more to do with business-to-business air and ocean transportation services for exporting freight in and out of the United States.

    Arkansas Best Corporation's stock has soared over the past year on rebounding fundamentals and its latest quarterly income of $0.54 blew out the consensus by $0.17 on revenue growth of 7.9 percent. Additionally, the company recently implemented a labor agreement in its ABF Freight segment giving analysts even better impressions about it. The company has also earned itself a Zacks buy rating.

    In the most recent quarter, Arkansas Best Corporation's revenue was $623.4 million compared to revenue of $577.5 million in the third-quarter of 2012. Its third-quarter 2013 net income was $14 million, compared to third-quarter 2012 net income of $6.5 million. For the first nine months of 2013, the company's operating income was just above break-even, reflecting the high cost structure of the previous labor agreement. In addition, year-to-date capital expenditures were minimal while the contract resolution process continued. This resulted in lower than normal expenses for the business. Therefore, it was a solid performance for the company compared to last year.

    "This was our strongest quarter of the year thanks to the solid performances of our emerging businesses and a tonnage uptick for ABF Freight," said Arkansas Best President and Chief Executive Officer Judy R. McReynolds. "In particular, Panther Expedited Services, which we acquired in June 2012, showed improved demand in several of the industries it serves."

    The full ratification of the labor agreement at its ABF Freight represents a major milestone. The level of cost savings achieved from it impacts the depth of future improvements. Apart from it, other initiatives underway are meant to improve the operational efficiency of the company. It currently has an active network analysis underway, the results of which are expected to be made public next year.

    Based on the factors mentioned, I believe it is definitely a great time to be an investor in Arkansas Best Corporation. The stock has moved up by 29.7 percent in the past month, while it is also above its 20 day moving average. The company's strong price performance could suggest its momentum won't slow down anytime soon.

    Stocks: YRCW, ARCB
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