We hosted meetings with SWFT’s President and CFO. Mgmt noted strong seasonal demand improvement in May and early June and generally tight capacity across the country outside of the Northwest. While pricing remains at the low-end of SWFT’s 2%-3% target for the year, SWFT affirmed guidance from its Analyst Day to grow rev. 10% this year and EPS 15% annually the next several years.
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Research. 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 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.
We emailed out a 70-page report reiterating our bullish TL thesis. We recommend buying TL stocks into early signs of tighter capacity and our expectations for capacity to tighten further the next few months and lead to stronger TL pricing into 2014. We also published a 60-page report on the rails and our expectation for stronger coal vols ahead. Bound hard copies of both reports will be available at our Global Transport Conference on Wednesday, May 22 and Thursday, May 23. If you can’t attend our conference, email us for hard copies of either report.
We have been arguing that supply-driven pressures will keep truckload (TL) capacity tight, leading to both strong pricing gains and market share growth for larger, better capitalized carriers over the next five to ten years. While relatively little supply has entered the market, pricing gains have been constrained by a continued weak demand environment. We still believe the capacity situation remains tenuous and believe TL pricing is poised to re-accelerate materially upon even a slight but sustainable improvement in demand, or a tightening in truck utilization resulting from upcoming changes in Hours of Service (HOS) rules.
This weekly report presents the most recent views we are hearing from industry insiders and summarizes the research of Wolfe Research. 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.
SWFT’s Analyst Day in NYC focused on the company’s recent strong execution, its continued deleveraging and its renewed focus on growth. SWFT is targeting 10% rev. growth this year (vs. our prior 5% forecast) and laid out long-term targets that imply 10%+ annual rev. and 15% EPS growth the next 5 years.
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.
SWFT reported adjusted 1Q EPS of $0.18 after excluding a $0.03 real estate gain vs. Cons. of $0.17 and our recently reduced est. of $0.15. Consolidated rev. growth of 3.6% y/y was in line with our model, while SWFT’s OR was 50bp better. By segment, Dedicated was materially better than we expected, TL modestly better and Intermodal much worse.