Heartland Express Has Tools To Offset A Cyclical Trucking Correction

Times are starting to get tough in the trucking industry. High channel inventories and weakening end-user demand are undermining the demand side of the equation and there is now significantly more capacity in the market. With that, spot rates are falling and are likely to collide with (and then briefly go below) spot rates in 2023, or possibly sooner.

That’s not a great set-up for any trucking company, but Heartland Express (NASDAQ:HTLD) is more than just any trucking company. Heartland has a strong operating track record and a solid core of drivers and equipment that stand out in the industry, not to mention long-standing customer relationship. The company also has M&A synergy levers to pull in 2023 that I believe can help offset some of the sector pressures coming in 2023.

Heartland shares have slipped about 4% since my last update, outperforming Knight-Swift (KNX) and Werner (WERN) by about 5%, as well as outperforming the broader transportation sector (the DJT is down about 16% over that time). I don’t prefer Heartland to Knight-Swift, which I recently wrote about here, but I do see Heartland as undervalued and possessing some counter-cyclical attributes that could help over the next six to 12 months.

 

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Heartland Express Has Tools To Offset A Cyclical Trucking Correction