Werner (WERN) Up 8.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Werner Enterprises has experienced an 8.5% increase in share price over the past month, outperforming the S&P 500, but recent earnings reports indicate potential challenges ahead [1]. Financial Performance - Q3 earnings were reported at 15 cents per share, missing the Zacks Consensus Estimate of 22 cents, and reflecting a 64.3% decline year-over-year [2]. - Total revenues for Q3 were $745.7 million, falling short of the Zacks Consensus Estimate of $787.5 million, and down 8.8% year-over-year, driven by a 9% decrease in Truckload Transportation Services (TTS) revenues and a 10% decline in Logistics revenues [2]. - Adjusted operating income decreased by 48% year-over-year to $21.6 million, with an adjusted operating margin of 2.9%, down 220 basis points from the previous year [3]. Segmental Results - TTS segment revenues fell 9% year-over-year to $522.8 million, with adjusted operating income down 41% to $24.5 million, and an adjusted operating margin of 4.7%, declining 260 basis points [4]. - Logistics revenues totaled $206.8 million, down 10% year-over-year, with adjusted operating income falling 75% to $804 million, and an adjusted operating margin of 0.4%, down 100 basis points [5]. Liquidity and Capital Expenditure - As of September 30, 2024, cash and cash equivalents were $54.66 million, down from $70.44 million in the prior quarter, while long-term debt increased to $690 million from $660 million [6]. - The company generated $61 million in cash from operations in Q3 2024, with net capital expenditure amounting to $87.9 million [6]. Share Repurchase and Outlook - No shares were repurchased during Q3 2024, with 3.9 million shares remaining under the repurchase authorization as of September 30, 2024 [7]. - For 2024, Werner anticipates TTS truck growth to decline by 6-8%, with net capital expenditure estimated between $240-$260 million [8]. - The company projects dedicated revenues per truck per week growth to rise from breakeven to 3% in 2024, and one-way Truckload revenues per total mile to improve from breakeven to 3% [8]. Estimates and Market Position - Estimates for Werner have trended downward, with a consensus estimate shift of -43.56% [11][12]. - The company currently holds a subpar Growth Score of D and a Momentum Score of F, with an aggregate VGM Score of D [13]. - The stock has a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [14]. Industry Comparison - In comparison, Old Dominion Freight Line, a peer in the Zacks Transportation - Truck industry, has gained 10% over the past month, reporting revenues of $1.47 billion, a year-over-year change of -3% [15]. - Old Dominion's EPS for the last quarter was $1.43, down from $1.55 a year ago, and it is expected to post earnings of $1.18 per share for the current quarter, reflecting a year-over-year change of -19.7% [16].