A miserable earnings season for the trucking sector continued on Tuesday with results from ArcBest(NASDAQ: ARCB). Shares of the Arkansas-based transportation and logistics provider traded down 13% as of 2:30 p.m. ET following the release of its quarterly earnings report.
A cool climate for demand
ArcBest investors were likely fearing the worst, ahead of the company's earnings release. A number of trucking stocks that have already reported, including industry juggernaut Old Dominion Freight Line, have posted disappointing quarters due to sluggish demand from large shipping customers.
ArcBest was no different. The company earned $1.34 per share in the quarter on sales of $1 billion, which was light compared to the expected $1.53 per share in earnings on revenue of $1.03 billion. Revenue was down 3%, and total shipments per day decreased by 6.2% year over year.
The trucking industry rebounded well after the pandemic on inventory restocking due to soaring demand for consumer goods, but large shippers turned cautious in 2023 amid signs that the economy could slow. Although the recession that some were fearing hasn't materialized, transportation companies haven't seen a bounce back in demand.
Is ArcBest a buy on its post-earnings dip?
Winter weather impacted the quarter, but the company saw some pricing momentum, thanks to a better mix of premium freight and decent contract renewal increases. That said, it's hard to get too excited about any trucker until the economy improves.
ArcBest is a decent operator caught in a tough operating environment. Until this cyclical stock sees trends reverse, there's no reason for investors to rush in.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Old Dominion Freight Line. The Motley Fool recommends the following options: long January 2026 $195 calls on Old Dominion Freight Line and short January 2026 $200 calls on Old Dominion Freight Line. The Motley Fool has a disclosure policy.
