Research Library — Filtered Results: Reports
Below is our research library filtered to show items tagged under Reports, 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.A 10-Minute Freight Update with Ed Wolfe: Look at Import/Export Exposures
Attached please find 14 slides and a 10 minute audio brief updating recent freight trends and looking at each of our 35 companies’ domestic vs. international and import vs. export exposures. We continue to expect strong freight performance in 2012 given the increased visibility in domestic volumes and pricing. Our favorite stocks entering the new year remain UNP, JBHT and SWFT.
Roadrunner Transportation: Initiating Coverage with Peer Perform Rating
Roadrunner is historically an asset-light LTL carrier, but it has quickly expanded into better margin and better return TL and Logistics businesses the past five years. Looking forward, we believe Roadrunner’s unique model should continue to deliver solid long-term growth, both organically and through acquisitions. Improving LTL pricing also seems positive in the near term, although this will likely be offset in the fourth quarter by higher interest expense and transaction-related expenses from recent acquisitions. We also see risk to LTL pricing next year in a slower industrial economy, and our 2012 EPS estimate of $1.07 is currently about 7% below prior Consensus.
State of the Freight: Fourth Quarter
This 82-page report analyzes the responses from nearly 140 traffic managers that filled out our fourth-quarter survey during October and early November. Within the report, we discuss in detail: pricing, volume, service and capacity trends across all modes of freight transportation. The report looks at inventory restocking trends and how they are currently driving reported freight volumes compared to the broader economy. Our report also reveals a clear dichotomy between TL capacity and pricing compared with LTL.
The Wolfe Monthly Macro Watch: More Mixed Signals from Freight – Domestic Continues to Feel Better than International
This month’s macro examines Sept. and Oct. data. Overall, trends remain mixed with 7 of 15 series this month improved y/y compared with the prior month, similar with the pace of improvement witnessed last month. Rail vols have improved y/y so far in 4Q relative to 3Q and the Ceridian Pulse of Commerce index (based on trucker fuel consumption) improved in Oct. for its best month in the past 4. However, the broad-based Cass shipment index slowed materially in Oct. and West Coast ocean port vols inflected back negative y/y in Oct. despite our channel checks which indicate signs of a late peak season. With some series improving and some decelerating, our view is that freight remains choppy but relatively stable overall with few signs of an impending material slowdown or recession.
The State of the Freight: Third Quarter
This 74-page report analyzes the responses from nearly 125 traffic managers that filled out our third-quarter survey during July and early August. Within the report, we discuss in detail: pricing, volume, service and capacity trends across all modes of freight transportation. The report looks at inventory restocking trends and how shippers’ expectations for targeted inventory levels going forward have now been reduced. Looking forward, shippers expect the greatest increases in Rail and TL pricing, while intermodal volumes decelerated sharply. Our survey also points to continued tight TL capacity as well as increasing volume shifts to rail/intermodal.
State of the Freight: Second Quarter
This 74-page report analyzes the responses from over 100 traffic managers that filled out our second-quarter survey during April and early May. Within the report, we discuss pricing, volume, service, and capacity trends across all modes of freight transportation. Our survey suggests that rate increases are likely to accelerate across nearly all modes of transportation over the next 12 months, with shippers expecting the largest increases in Intermodal and Rail. Shippers this quarter also perceived the relatively worst rail service levels in nearly five years, which they attribute to labor and railcar constraints.
LCC Initiation: Underappreciated Catalysts Exist
With the recent run in jet fuel prices shares of LCC have become highly inversely correlated to oil, almost certainly because the company has no fuel hedges. We wish all airlines would follow the examples of the trucks, rails, and logistics companies and stop hedging to facilitate an improved ability for airlines to fuel surcharge. We believe those who trade shares of LCC purely as a derivative on fuel prices are underestimating robust underlying demand trends and other catalysts.
UAL Initiation: The One Airline Stock to Own if You Own One
We expect United Continental Holdings (UCH) to grow pro forma consolidated PRASM by 7.1% y/y, the best among network carriers. We expect this to be driven by revenue synergies (of which we believe UCH will achieve at least $250 million in 2011 depending on the timing of labor contracts) and opportunities from antitrust immunity (ATI) in the Atlantic and Pacific. We view UCH’s revenue managers as the best in the industry based largely on the willingness to take inventory risk (we believe this is occurring again).
LUV Initiation: Resistance to Bag Fees Keeps us on the Sidelines
Like JetBlue, Southwest attempts to differentiate itself by offering a bundled product to price-conscious consumers, most notably two free checked bags. We do not expect a reversal of this policy anytime soon. Since the industry’s widespread adoption of bag fees, Southwest has significantly outperformed on PRASM, and the company says it is gaining market share because of its lack of fees. However we calculate Southwest is leaving over $1.0 billion of annual high-margin revenue on the table, equating to $0.53 in lost EPS in 2011 alone.
JBLU Initiation: Customers and Employees Seem to Come First
JetBlue has never reported a calendar year of negative ASM growth, and we believe JetBlue will grow if there is even the slightest reason to do so. This will likely result in a consistently higher earnings multiple relative to peers as investors tend to pay more for growth airlines. However, we believe growth will be a net negative for JetBlue’s stock price due to yield dilution as the company engages in price wars to gain market share, takes on a heavier debt burden from new aircraft, and manages the unease of investors who yearn for capacity discipline.
