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 ITSupport@WolfeResearch.com to request our PDF decryption plug-in.
Friday Freight
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Trahan. Included are (1) key takeaways, selected shipper comments; (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 & logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
On Track, Week 28 Ending July 14: Strong Rail Volume Growth Led by Autos
Total Week 28 rail vols increased 3.6% y/y vs. +2.8% and +3.6% the past 2 weeks. Vols ex-coal improved closer to 5% y/y, also similar with the past 2 weeks. Total vols are now tracking up 3.2% the past 6 weeks, better than +1% in both 2Q and 1Q, aided by easy comps the past few weeks against heavy flooding in the Midwest a year ago.
HTLD 2Q Earnings: Solid Report Excluding Gains on Sales
HTLD reported 2Q EPS of $0.21, in line with our est. and Cons. We are lowering our C12-13 EPS by $0.01 each to $0.76 and $0.84 and are now 2%-3% below Cons. the next 2 years. While we remain bullish on TL stocks into what we believe will be a multi-year pricing story, we expect HTLD to show low-end leverage to improving TL pricing gains and market share growth relative to its peers. Still, we see limited absolute downside from current levels.
FWRD 2Q Earnings: Solid Volume Growth and Margin Improvement Drive Another Upside Quarter
FWRD reported 2Q EPS of $0.48, $0.02 above Cons. and $0.01 above our high-end estimate. FWRD continues to beat expectations, and our sense from mgmt is that vols in July have continued to grow mid-single digits y/y. While overall demand is sluggish, new business from former BAX customers should be a tailwind over the remainder of the year, regardless of the economy. However, lower fuel will become an EPS drag in 3Q and EPS can swing quickly against FWRD in a slowing economy.
HUBG 2Q Earnings: Brokerage and Mode Drive EPS Miss and Lower Guidance
While HUB’s EPS grew 14% y/y, it missed Cons. by 4% and lowered its full-year C12 EPS guidance 7% below prior Cons. at the midpoint. Relative to our lower-end expectations, Brokerage and Mode were weaker in 2Q, while Intermodal gross rev. was better. While brokerage continues to disappoint, intermodal vols remain solid and HUBG’s reduced guidance range seems very realistic in a stable economy. While we expect near-term pressure on the stock following last night’s guidance cut, valuation at 16.2x forward P/E on our reduced estimates seemingly reflects low expectations and downside seems limited given strong near- and long-term secular intermodal tailwinds.
UNP 2Q Earnings: Raising Estimates After Strong 2Q Beat
UNP reported all-time records for rev., EBIT and EPS and beat Cons. estimates by 7% . With coal vols expected to ramp sequentially and given continued strong pricing and productivity metrics, we are raising our C12-13 EPS estimates by 3% and 4% to $8.55 and $9.75 vs. prior Cons. of $8.16 and $9.32. UNP remains our favorite rail stock given visibility to continued high-end pricing gains along with long-term productivity improvement. UNP’s coal vols have also clearly bottomed, while growth in shale related vols remains robust.
SWFT 2Q Earnings: Will Solid Beat and Strong Free Cash Finally Get Depressed Stock Going?
SWFT reported adjusted 2Q EPS 15% above Cons. and up 50% over a year ago. Relative to our expectations, consolidated rev. was in line, while margins were much better. SWFT’s stock has acted as if something is broken. Yet in 2Q SWFT generated material free cash flow and paid down material debt for the 4th consecutive qtr, beat Cons. by 15%, and grew unadjusted EBIT and EPS by 19% and 50%. SWFT’s current adjusted forward P/E below 8x seems about 2x too low, and mgmt has done a good job getting ahead of expectations in the near term. We believe SWFT currently has the most fundamental upside in our coverage.
Friday Flyer
This week 94% of UAL pilots voted to strike if the National Mediation Board (NMB) declares that negotiations between ALPA and UAL reach an impasse. We do not believe a strike is likely. Since deregulation no pilot group at a domestic airline as large as UAL is now has ever been permitted to do so. Even AMR pilots were sent back to work by President Clinton in 1997, and AMR represented 17% of U.S. capacity then vs. 21% now for UAL. In this note we dive deep into multiple aspects of pilot strikes, including a look back at history as a guide to the present, why pilots released this vote now and who the key parties are, and why lobbying efforts and certain union affiliations might matter. We also provide some hopefully helpful background information on the Railway Labor Act, which dictates U.S. airline labor procedures. To be clear, we view a pilot strike at UAL as a miniscule possibility, but that’s not to say the mere concept of one can’t serve as an overhang to the stock. Labor law is complicated, so headlines matter.
Research Library
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- Conference Calls
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- Ed Wolfe Bi-Weekly Freight Update