Research Library
Below is our complete library of daily research listed in reverse chronological order. Please use the search box to look for research on a specific company or topic, or use the Calendar, Archives, or Sector links at left to browse for research from a specific time period or sector. The buttons on the side will filter our catalogue to show longer full length reports, past conference call replays, our interactive doh! scenario models, and iFreight, our daily transport blog with real-time updates on transportation topics throughout the day. If you are a Wolfe Trahan client and can not access any of the links in our library, please contact to request our PDF decryption plug-in.Hunter Keay Conference Call: U.S. Airlines – Time to Own the Group
Hunter Keay will host this conference call. Key topics will include: How are airlines making money with high fuel costs and mixed global economic data?; Merger madness! What are the possible outcomes with recent media reports of even more M&A?; Expectations for pricing and capacity trends; Controllable vs. uncontrollable risks, including labor & regulatory issues… does this industry control its own fate?; and Which airline stocks are most likely to outperform (and to underperform)?
Under the Hood: January Truck Orders & December Engines
ACT Research reported Jan prelim Class 8 net orders of 25,200, between 30,293 in Dec and 20,603 in Nov. The Jan order pace implies an annual build rate of ~292K, down from the 350K order rate in Dec. The trailing 3- and 6-month annual order rates are both 296K-297K.
The Wolfe Trahan LEI Rises In The Week Ending 2/03
The level of the WTLEI rose last week alongside a rally in global equity markets and strong economic data. January was a very strong month for LEIs with nine PMIs showing improvement and only two moving lower. Both of the national surveys, the ISM Manufacturing and ISM Non-Manufacturing indices continued their upward trend. This week will be a quiet one and we will not receive the first February LEI report until next Wednesday (Feb 15th). Stay tuned!
The three components of the WTLEI exhibited strength across the board last week. The economic component boosted the index the most as the policy outlook, labor market, and credit conditions improved considerably. The housing component was the one segment of the WTLEI that dragged on the index last week. Strength in the market and sentiment components added to the improvement in the WTLEI last week.
A Goldilocks Economy In The “New Normal” … Take 2
It’s time for honesty. It is very hard to be bullish on the economy and the markets with all the structural headwinds facing the world’s economy. That said, we are more convinced than ever that it is the right call today. Indeed, if there is one lesson to be garnered from Q4 ’11 it is that the cyclical outlook is all that matters to equities in the near-term … structural issues are just not relevant in that timeframe. The cycle is clearly heating up in the U.S. and abroad and equities are responding accordingly. To be truthful, we are not even sure what the bear camp is thinking anymore but it must be pretty lonely.
We’ve been making comparisons to the Japanese experience for some time now. It is generally not viewed as a popular topic with clients. Here’s one bright light in that thesis. The Nikkei has had four rallies of more than 50% in the past 20 years and all of those occurred in the wake of a decline in inflation. This is exactly what the U.S. is experiencing today and the market is behaving similarly. Like Japan, a drop in inflation in the U.S. is a form of stimulus and clearly the backdrop is reflecting that.
So our thesis that “inflation is the new Fed Funds rate” looks more plausible now that the economy has rebounded. How does one argue with this data? We are clearly as bullish as it gets and even we are surprised by the strength in the employment figures. Take a look at leading indicators of employment and you simply cannot believe a recession is in the offing. As the chart above highlights, the average workweek is now sitting at its highest readings in over a decade! Surely, one can explain this as a one-off … just like you can explain claims coming down so much as an aberration. We hate to say but, “it’s the economy, stupid”. This won’t last forever but it is Goldilocks as we begin 2012. Enjoy!
Friday Flyer
In this Friday Flyer we discuss our thoughts on AMR’s proposed business plan and December financial results, a tentative agreement on a long-term FAA bill, implications from the DAL/LCC merger talk, a new fee from SAVE, and much more.
CVTI 4Q Earnings: 4Q Loss Worse Than Expected on Weaker Utilization
CVTI reported a 4Q EPS loss of $0.15/shr., worse than our estimate of -$0.05 and Cons. of -$0.09 and down materially from +$0.05 a year ago. Rev. declined 1% y/y ( 7% net of fuel) due to weak utilization and margins deteriorated 290bp y/y. This compares with -2% net rev. and 390bp of OR deterioration in 3Q.
LSTR 4Q Earnings: Brokerage Drives Solid Quarter
LSTR reported 4Q EPS of $0.70 vs. our estimate of $0.67 and Cons. of $0.66. We estimate LSTR benefited by about $0.03 from an extra operating week in the qtr., offset by a large bad debt expense. Reported Rev., EBIT and EPS grew 22%, 42% and 40% y/y, each accelerated from 3Q.
R 4Q Earnings: Similar Trends Continue into 2012 Against Tougher Comps
R reported adjusted 4Q:11 EPS of $0.97 relative to our $0.99 and Cons. $0.96. This excludes about $0.05 of planned restructuring costs related to acquisitions, which arguably is part of being an acquisitive company. Rev, Pretax and EPS grew by 17%, 48% and 49% y/y, similar to 3Q, driven once again by strong Commercial Rental, Gains on Sales and Supply Chain Solutions.
ODFL 4Q Earnings: ODFL’s LTL Dominance Continues
ODFL beat 4Q Cons. EPS expectations by 19% yesterday as Rev., EBIT and EPS grew 22%, 67% and 76% y/y despite a very difficult comp (EPS grew 128% a year ago in 4Q). Relative to our higher-end forecasts, rev. was 100bp better and margins were 60bp better. ODFL also benefited by $0.04 from a lower than expected tax rate vs. our model.
CNW 4Q Earnings: 4Q Miss and Rising Costs Ahead
CNW reported 4Q EPS of $0.26, well below our expectation and Cons. of $0.37. Consolidated rev. growth of 7.0% decelerated modestly from +8.4% in 3Q but was nearly 300bp better than our expectations. However, OR improvement of 170bp y/y fell 70bp light of our expectations. Relative to our forecasts, LTL missed by $0.10 including a $0.06 headwind from higher retirement reserves (see below), while Menlo was $0.02 better and TL was slightly worse.
