Research Library
Below is our research library, 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. 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.Friday Freight
This weekly report summarizes the most recent views and research of Wolfe Trahan. Included are (1) three to five snippets or key takeaways from our team’s recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
GT: Upside EPS, But Tough to Get Past Materials Costs
Upside EPS Versus Cons. GT reported 2Q operating EPS of $0.13 vs our $0.22 est and Cons. of $0.05, excluding four different one time charges netting to $0.02. GT reported GAAP EPS of $0.11. Rev growth of 15% y/y and an 18.7% gross margin were in line with our ests, but SG&A costs were 70bp higher than our est as a % of rev.
DAN: Strong Quarter But Stock Discounting Strong Growth
DAN’s 2Q adj. EBITDA of $154M was above our $122M est and Cons. $123M on higher rev and better margins. Adjusting for elevated D&A from fresh start accounting and other ongoing restructuring costs of $57M, ongoing EPS of $0.40 was above our $0.16 est and Cons. $0.15 with a $0.02 benefit from a lower tax rate. GAAP EPS was $0.01.
UACL: Relatively Muted Earnings Continue, Despite Strong Gains in Flatbed Pricing
Yesterday afternoon, UACL reported 2Q EPS of $0.15, above our estimate and Cons. of $0.14. However, after normalizing for a one-time Casualty Insurance reversal and a lower than normal tax rate, the qtr. was closer to $0.13-$0.14. EPS improved sharply from $0.09 a year ago, but remains depressed vs. $0.30 ongoing 2 years ago. Relative to our expectations, gross rev. was 1.5pp light but op. margins were 40bp better, including the casualty benefit.
SAIA: Tonnage/Price Trade-Off Apparent in Upside Report
SAIA reported 2Q EPS of $0.12, in line w/ our high-end estimate and well above Cons. $0.09 and -$0.13 a year ago. Both Rev. and margins were in line w/ our high-end expectations although tonnage was slightly below our estimate, offset by better than expected gross yields. Both EBIT and EPS inflected positive vs. the year ago qtr.’s losses.
RA: Another Step in the Right Direction, But Still No Clear Near-Term Catalyst
Yesterday afternoon, RA reported ongoing 2Q EPS of $0.07, $0.01 above our estimate and Cons. RA beat our expectations on stronger Non-Freight Rev. growth as Freight Rev. and Expenses were generally in line. While Rev. was up 18% y/y, EPS fell from +$0.14 a year ago due to a $0.03 y/y fuel headwind and a $0.05 y/y headwind from the loss of the short-line tax credits.
ODFL: Strong Beat on Operating Leverage, Pricing Still to Come!
ODFL reported EPS 26% above Cons. yesterday morning driven by both better than expected Rev. growth (16% vs. our 14% expectation) and Operating Ratio (89.1% vs. our 90.6% expectation and 93.2% a year ago).
CP: Another Solid Quarter But Valuation and Visibility Remain Challenging
CP reported 2Q EPS 11% above Cons. Rev., EBIT and EPS increased by 20%, 48% and 96% y/y, similar to 1Q despite a previously disclosed C$0.12/shr headwind from record floods and a C$0.03/shr currency drag from the weaker CAD. Relative to our higher-end expectations, Rev. was slightly worse and margins about 70bp better. CP also benefited by C$0.03/shr from higher Other Income.
As The Benefits Of Past Policy Easing Recede … Will Consumer Discretionary Shares Follow?
The balance sheets and income statements of U.S. consumers and U.S. corporations could not be more polarized. A comparison to Japan comes to mind, but they had it the other way around (i.e., too much corporate leverage and too much consumer savings, or “cash on balance sheets”). As we now know, consumer spending in Japan wasn’t able to make up for the multi-year deleveraging that took place on the corporate side. Today, the U.S. faces similar, but not identical economic challenges ahead. With consumer spending now up to 71% of GDP, the U.S. economy has become increasingly exposed to a slowdown in consumption.
While we are not the betting kind, the odds are certainly stacked against the consumer … balance sheets are weak, income growth is stagnant and the benefits of last year’s stimulus are now running on fumes. We can only hope that corporations begin to spend, and governments create policies that attract investment and job creation. That said, with stimulus no longer in the pipeline, Consumer Discretionary shares are likely running on fumes as well, or at least on the hope that the U.S. consumer remains resilient … and if not, that policy makers are ready to step in quickly.
Using simple back-of-the-envelope math, the consumer has accounted for 80% of the economic recovery thus far. This makes sense as they were ultimately the target audience of many of the stimulus packages (e.g,. cash for clunkers, home-buyer tax credit). Surely, the nonfinancial corporate sector didn’t need more cash. With government stimulus winding down, who will pick up the baton and keep the consumer and consumer shares resilient? While we are waiting for candidates to make a move, we will remain cautious on Consumer Discretionary shares.
CHRW: Pricing and Net Revenue Inflect, Driving Upside 2Q
CHRW reported 2Q EPS 7% above Cons. and our expectations, driven by stronger Gross and thus Net Rev. on better than expected TL pricing and + fuel impact. Transportation yields were roughly in line w/ expectations but total yields about 30bp better. Net Rev., EBIT and EPS increased 4%, 4% and 8%, all improved from 1Q.
