It has been a while since Old Dominion (NASDAQ:ODFL)
has looked cheap by conventional valuation standards, but then the
company has logged a strong stretch of better-than-average performance.
Almost a year ago, I thought that Old Dominion was a good stock to consider
despite its valuation and the company's strong operating performance
has led to better than 30% appreciation since then - well ahead of other
trucking peers like Con-way (NYSE:CNW), ArcBest (NASDAQ:ARCB), YRC Worldwide (NASDAQ:YRCW), and Saia (NASDAQ:SAIA).
Old
Dominion remains what it has been for some time - an exceptionally
well-run trucking company that still has the opportunity to take share
from less efficient rivals. The same is true on the valuation side, as
this is a stock that is more challenging to argue is undervalued. Paying
a low teens multiple to EBITDA doesn't seem unreasonable if
expectations of mid-teens EBITDA growth prove accurate, but I can
understand why some investors may hesitate to pay a premium for a
company that is in a competitive, regulated, and cyclical industry.
Read more here:
Old Dominion's Performance Argues For Paying Up For Quality
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