Old Dominion Will Prove Its Superiority Through The Downturn, But The Price Gives Pause

I know, I know … I’ve written plenty of times that I believe Old Dominion (ODFL) is the best less-than-truckload (or LTL) carrier out there, and quite possibly one of the best-run companies I follow irrespective of industry, but it’s always just so darn expensive. And it certainly won’t hurt the “forget about valuation, just buy good companies and hang on…” argument to note that the shares are up another 15% from my last article – a time period over which the S&P 500 fell 10%, the Dow Jones Transport Index fell 23%, and my preferred proxy for industrials likewise fell a little less than 23%.

I honestly have no concerns about Old Dominion heading into this downturn, at least from an operational perspective. The company will probably lose some share to more aggressive pricing, but when economic conditions turn back up, the company will win most of that back on its higher service quality. Likewise, I see no reason why Old Dominion can’t continue its value-conscious organic expansion strategy and build its national share to more than 15% over time. But unless you’re content to accept a roughly 6% expected total return on cash flows, valuation is still problematic.

Click here for the full article:
Old Dominion Will Prove Its Superiority Through The Downturn, But The Price Gives Pause