On Thursday, TD Cowen maintained a Buy rating on shares of ArcBest Corp (NASDAQ: NASDAQ:ARCB) but reduced the price target from $136.00 to $131.00. The adjustment comes after the analyst's review of quarter-to-date trends indicated a decrease in the company's asset-based business and an expected loss in its asset-light segment.
ArcBest, a freight transportation and logistics company, saw a 10% decline in August tonnage per day within its asset-based business, although revenue per hundredweight (CWT) increased by 4%. The asset-light segment is projected to face a loss of approximately $5.5 million at the midpoint of expectations.
In light of these developments, the analyst revised the financial model for ArcBest, leading to a decrease in out-year earnings estimates. The estimated earnings per share (EPS) for the year 2026 have been adjusted to $12.50. Despite this revision, the firm's valuation multiple remains unchanged at 10.5 times, which supports the new price target of $131.00.
The analyst reaffirmed the Buy rating on the stock, indicating a continued positive outlook on ArcBest despite the adjustments to the financial forecasts and price target. The changes reflect the firm's latest analysis of the company's performance and market conditions.
In other recent news, ArcBest Corporation has reported mixed financial results for Q3 2024. The company's Asset-Based segment experienced a decline in daily tonnage but saw an increase in billed revenue per hundredweight (cwt), while the Asset-Light segment reported a 7% decrease in revenue per day quarter-to-date. Despite these declines, ArcBest plans to implement a 5.9% general rate increase for less-than-truckload services.
In response to these developments, BofA Securities adjusted its outlook on ArcBest, reducing the price target from $102.00 to $99.00 while maintaining an Underperform rating. Similarly, Stifel reduced its stock price target for ArcBest to $131 from the previous $150, but maintained a Buy rating, anticipating stronger-than-expected revenue from the telecom segment and a modest recovery into the September quarter.
ArcBest executives have expressed confidence in the company's strategic positioning for recovery in freight volumes, emphasizing their disciplined approach to pricing and cost management.
The company plans to invest between $325 million and $375 million in 2024 and has already returned $37 million to shareholders in the first half of 2024 through share buybacks and dividends. These recent developments underscore ArcBest's commitment to driving future growth amidst industry-wide demand challenges.
InvestingPro Insights
As the transportation and logistics sector navigates through fluctuating market conditions, ArcBest Corp (NASDAQ: ARCB) is under scrutiny from investors and analysts alike. With a current market capitalization of $2.42 billion and a P/E ratio standing at 18.8, ArcBest's financial health and stock performance are critical to assess.
InvestingPro data shows that ArcBest has experienced a revenue decrease of nearly 6.81% over the last twelve months as of Q2 2024. Despite this, the company has a solid track record of maintaining dividend payments for 22 consecutive years, showcasing a commitment to shareholder returns. Furthermore, the company's cash flows have been robust enough to cover interest payments, which is a positive indicator of financial stability. This aligns with the InvestingPro Tip that ArcBest operates with a moderate level of debt, suggesting a balanced approach to leveraging.
While the stock has faced a significant downturn over the last six months, with a price total return of -27.19%, analysts predict the company will remain profitable this year, as per another InvestingPro Tip. This is supported by the company's profitability over the last twelve months and a strong return over the last five years.
For investors looking to delve deeper, there are additional InvestingPro Tips available on https://www.investing.com/pro/ARCB, which can provide further guidance on ArcBest's performance and potential investment strategies.
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