Wednesday, July 4, 2018

Is Old Dominion Already At Maximum Overdrive?

LTL trucking company Old Dominion (ODFL) has been on my list of favorite companies for a long, long time, but the volatility of the shares hasn’t always made them a preferred option for my own portfolio. Although the trucking industry continues to see red-hot demand and the sector has done pretty well in the market, Old Dominion’s performance since my last update has lagged peers like Saia (SAIA), ArcBest (ARCB), and YRC Worldwide (YRCW), despite no real let up in performance. Keep in mind, though, that if you stretch the performance timeline out to a year or more, Old Dominion starts looking better.

It’s hard not to like a company that is seeing 20%-plus revenue growth, particularly when demand remains very healthy and supply is constrained by labor difficulties. On top of that, Old Dominion has proven itself over and over again with its investments in IT and its ability to recruit, train, and retain employees, and still has meaningful potential areas of growth. Even still, this is a stock where the forward P/E multiple can fall by half from peak to trough (and it recently hit a peak) and I’m not willing to pay a mid-teens multiple on EBITDA for even one of the best less-than-truckload (LTL) carriers.

Click here to continue:
Is Old Dominion Already At Maximum Overdrive?

No comments: