Transportation and logistics likely to slash well in advance of the broader markets

Sep. 15, 2022 3:20 PM ETFDX, UPS, CHRW, CSX, EXPD, NSC, UNP, KNX, HTLD, WERN, LSTR, FWRD, JBHT, ODFL, HUBG, SNDR, SNDLBy: Manshi Mamtora, CFA3 Comments

Trucks driving through a countryside landscape at sunset

Marcus Lindstrom

  • Baird reports explain that transportation indicators are first to bottom before macro data and the broader market dips. Digging deeper, Dow Transports bottoms 1-2 quarters before the cyclical low in manufacturing PMI.
  • However, leading PMI indicators suggest manufacturing PMI levels may not bottom until H2 2023.
  • Trough PMI levels point towards a sharper economic downturn and transport EPS declines ~20% during prior U.S. recessions.
  • Historically transports have experienced trough EBIT declines of +20% vs. the current consensus decline of ~4% expected for 2023.
  • Stocks on radar: C.H. Robinson Worldwide (CHRW); CSX (CSX); Expeditors International of Washington (EXPD); FedEx (FDX); Forward Air (FWRD); Heartland Express (HTLD); Hub Group (HUBG); J. B. Hunt Transport Services (JBHT); Knight-Swift Transportation (KNX); Landstar System (LSTR); Norfolk Southern (NSC); Old Dominion Freight Line (ODFL); Ryder System (R); Schneider National (SNDR); Union Pacific (UNP); United Parcel Service (UPS); Werner Enterprises (WERN)

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