Forward Air Shuffling Forward

Market leadership and hard-to-replicate assets don't ensure success, as seen at Forward Air (NASDAQ:FWRD) in recent times. While the shares have been performing better of late, and there seem to be some signs of positive momentum in the business, the three-year performance compared to the S&P 500 or other transportation and logistics companies like Old Dominion (NASDAQ:ODFL), Hub Group (NASDAQ:HUBG), J.B. Hunt (NASDAQ:JBHT), and C.H. Robinson (NASDAQ:CHRW) hasn't been great, as the company has struggled to translate a bigger revenue base into better bottom-line performance metrics.

Business does seem to be improving, as FWRD's top-line performance in the fourth quarter and guidance for the first quarter were good relative to expectations, and the company is seeing long hoped-for operating leverage in its Pool Distribution business. The problem is that the share price moves have largely captured this. I think Forward Air will have its work cut out to generate long-term growth above the mid-single digits, and even if corporate tax reform reduces its tax rate to the mid-20%'s, it's hard for me to see a fair value much above $50.

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Forward Air Shuffling Forward