Below, we analyze transport stock performance during past periods of rising ten-year treasury yields like we’ve seen over the past month. Transport stocks typically outperform the market in the one-year period after rates bottom with the most outperformance from non-asset-forwarders and truckers. The rails are the one sub-sector that has historically underperformed in this environment. (pg. 2)
LSTR hosted its scheduled 2Q mid-qtr. update at 2pm ET today (Tues, May 28th). LSTR now expects 2Q EPS of $0.63-$0.68 vs. its prior guidance of $0.68-$0.73, prior Cons. of $0.71 and $0.76 a year ago. LSTR materially cut its gross rev. expectation from a decline of 2%-4% previously to an expected decline of 5%-10% now in 2Q. This compares with -3% y/y in 1Q and our prior -2% estimate.
This month’s Macro examines March and April data. As shown on Slide 8, freight vols on avg. declined 2% y/y in March and are tracking up less than 1% y/y based on preliminary April data after growing close to 3% the 1st two months of the year. Moreover, our proprietary Seasonal Freight Index (Slide 7) has dipped back below 50 the past 2 months after accelerating sharply late last year and early this year.
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.
LSTR reported flat y/y EPS, in line with Cons. and $0.01 below our expectations. Gross rev. declined 3% y/y and EBIT grew 1%, both worse than flat and +6% during 4Q. Gross rev. badly missed our expectation, but OR was 10bp better than our model. LSTR is continuing to see weak rev. trends in April and mgmt guided to 2Q EPS of $0.68-$0.73, down 7% y/y at the midpoint and 9% below prior Cons.
Transports Have Little Direct Government Exposure, But Sequestration Still Likely to Have Modest Negative Impact on Freight Volumes. We estimate AAWW and WAB have the most direct exposure to the U.S. gov’t at 30% and 20% of total rev., respectively. We suspect FDX and UPS also likely have higher-end gov’t exposure among the transports, but nobody else has more than 5% direct rev. exposure. Still, freight vols will likely be negatively impacted by sequestration, due in part to customs delays at major ports and the Canadian and Mexican borders.
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.
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.
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.
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.