Ground Transportation Stocks Q2 Teardown: RXO (NYSE:RXO) Vs The Rest
Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at RXO (NYSE:RXO) and its peers.
The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.
The 16 ground transportation stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 1%.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Ground transportation stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
RXO (NYSE:RXO)
With access to millions of trucks, RXO (NYSE:RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
RXO reported revenues of $930 million, down 3.4% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ volume and operating margin estimates.
Drew Wilkerson, chief executive officer of RXO, said, “In the second quarter, RXO continued to execute well, including achieving 4% Brokerage volume growth despite the prolonged soft freight market. We focused on effectively managing our cost of purchased transportation and achieved Brokerage gross margin of 14.7%. Our complementary services were also a significant contributor to our performance. Last Mile stops grew at the fastest rate in nearly two years, and our Managed Transportation business was awarded more than $200 million in freight under management and continued to grow year-over-year synergy loads it provides to our Brokerage business.
Unsurprisingly, the stock is down 7.9% since reporting and currently trades at $27.53.
Is now the time to buy RXO? Access our full analysis of the earnings results here, it’s free.
Best Q2: Heartland Express (NASDAQ:HTLD)
Founded by the son of a trucker, Heartland Express (NASDAQ:HTLD) offers full-truckload deliveries across the United States and Mexico.
Heartland Express reported revenues of $274.8 million, down 10.3% year on year, in line with analysts’ expectations. The business had an exceptional quarter with an impressive beat of analysts’ earnings estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.1% since reporting. It currently trades at $12.07.
Is now the time to buy Heartland Express? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Hertz (NASDAQ:HTZ)
Started with a dozen Model T Fords, Hertz (NASDAQ:HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.
Hertz reported revenues of $2.35 billion, down 3.4% year on year, falling short of analysts’ expectations by 4.3%. It was a disappointing quarter as it posted a miss of analysts’ operating margin and earnings estimates.
Hertz delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 20.8% since the results and currently trades at $3.24.
Read our full analysis of Hertz’s results here.
U-Haul (NYSE:UHAL)
Founded by a husband and wife, U-Haul (NYSE:UHAL) offers truck and trailer rentals and self storage units.
U-Haul reported revenues of $1.55 billion, flat year on year. This result was in line with analysts’ expectations. More broadly, it was a mixed quarter as it recorded a miss of analysts’ earnings estimates.
The stock is up 22.1% since reporting and currently trades at $77.24.
Read our full, actionable report on U-Haul here, it’s free.
ArcBest (NASDAQ:ARCB)
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ:ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
ArcBest reported revenues of $1.08 billion, down 2.3% year on year. This print topped analysts’ expectations by 1.9%. However, it was a weak quarter as it produced a miss of analysts’ earnings estimates.
ArcBest delivered the biggest analyst estimates beat among its peers. The stock is down 10.1% since reporting and currently trades at $109.30.
Read our full, actionable report on ArcBest here, it’s free.
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