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.
AMR continues to entrench itself; Aircraft as poison pills?
Last week in a letter to employees, AMR disclosed the purchase of two more B777-300ER aircraft, Boeing’s largest (~365 seats) and most expensive ($315M list price) plane, as well as the conversion of one B777-200ER to another B777-300ER model. AMR now has 13 B777-300ER aircraft on order, all of which we believe AMR has purchased for growth, not replacement, in slot controlled airports. We believe AMR will continue to acquire additional B777-300ER aircraft. AMR has quietly acquired these planes in piecemeal since the start of last year, both before and after last July’s mega-order of 460 Boeing and Airbus planes.
Recap of 2Q Freight Reports – A 10-minute audio brief with slides
Click through to listen to this 10-minute audio brief with slides:
With 33 of our 35 freight companies under coverage having reported, this 10-minute audio brief focuses on some of the key operating trends we have seen reported over the past few weeks for the rails, TL, LTL, brokers, intermodal providers and parcel carriers. The transports continue to grow EBIT well above that of the market but the stocks continue to underperform the S&P 500 year-to-date meaning our sector’s valuation relative to the market continues to become more compelling. Moreover, freight’s leading indicator the TL carriers continue to point towards several more quarters of muted, unexcited and modest growth—not a recession. Freight volumes were at the low end of modest growth in 2Q and seem poised to improve a little from here into likely an early peak season.
RRTS: Another Tuck-In Acquisition
RRTS announced it acquired R&M Transportation and Sortino Transportation (collectively R&M) for a combined $24.4M and a $5M potential earn-out. We estimate RRTS paid about 5x EBITDA, or closer to 6x, including the earn-out payment. On an annual basis, we estimate about $0.06 of EPS accretion after financing costs and before synergies which are likely modest. With organic LTL terminal additions, combined with recent and future truck and logistics acquisitions, we believe RRTS is well-positioned to continue growing rev. and EPS strong double-digits for years to come. We also believe RRTS should continue to take LTL share without the same labor and other cost inflation pressures facing asset-based carriers, while its shift toward independent contractors should drive continued LTL margin improvement in the near term. We reiterate our OP rating and $22 target price.
YRCW 2Q Earnings: Signs of Improvement and Stable Liquidity
YRCW reported consolidated 2Q EBIT of +$16M, much better than our -$18M expectation and its 1st qtr. of positive continuing EBIT since 3Q:08. Based on YRCW’s stable liquidity, we believe the other LTL’s should continue to trade as if YRCW is wounded but not imminently about to declare bankruptcy. Meanwhile, YRCW reported better sequential yield trends in 2Q vs. other LTLs, suggesting YRCW is not going after market share.
Research Library
- Coverage List
- Consolidated Research Library
- Airfreight & Surface Transportation Library
- Portfolio Strategy Library
- Quantitative Analysis Library
- Accounting & Tax Policy Library
- Auto & Truck Manufacturing Library
- Airlines Library
- Conference Calls
- Interactive Doh! Models
- Ed Wolfe Bi-Weekly Freight Update