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

Seeking Alpha: XPO's Painful Climb Toward The Top

It has been a little over a year since I last wrote on XPO Logistics (NYSE:XPO), and I'd like to say that time flies when you're having fun, but that's not the case. As it concerns XPO, the company has used that intervening time to take a very big step toward its goal of being a market share leader along the waterfront of logistics and freight service, but at the cost of significant investor angst and a sharp re-evaluation of the "right" multiple for the business.

The share's value has fallen close to 40% since I last wrote, and my $50-plus fair value at that time was predicated on the company remaining a growth-oriented asset-light third-party logistics company. Instead, the company has pivoted toward a much more balanced asset-heavy/asset-light mix. While that isn't necessarily a bad strategic move, it does change the long-term complexion of free cash flow generation, the volatility of those cash flows, and the multiple the market will be willing to pay for the shares.

There seems to be a recurrent communication issue between the Street and the company, and that concerns me. I don't know if it stems from management being more freewheeling and flexible in its long-term plan than previously thought, or whether there's more of a "making it up as we go along" element to it. In any case, while I do see meaningful value here, management has a lot of work to do to reassure investors about its long-term strategy and about the true synergies of mixing asset-heavy and asset-light businesses in the transportation and logistics space.

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XPO's Painful Climb Toward The Top

Investopedia: A Confusing Quarter From FedEx

Sometimes, what a company reports about its quarter means everything for the performance of the stock. In other cases, Wall Street decides to use a quarterly report as a launching pad for a broader verdict on an entire sector or theme. That would seem to be the case at FedEx (NYSE:FDX); while the quarter arguably was not as strong as the headline numbers suggest, the market reaction would seem to be a broader vote on the near-term outlook for the global economy.

Fiscal Q1 - Not as Good as it Seems?
On the surface, it looks like FedEx did what it had to do this quarter. Revenue rose more than 11% and surpassed the average estimate, and the company showed fairly solid operating leverage. Still, there were some "yeah, buts" this quarter.

Within the top line number, express revenue rose more than 11%, but volume was barely positive. Domestic package volume was actually down and international priority volume was surprisingly weak (down about 4%). Ground revenue looked solid (up 16%) and volume was decent, but freight revenue was up only about 6% despite a nearly 13% increase in yields (that is, pricing).


Read more at this link:
http://stocks.investopedia.com/stock-analysis/2011/A-Confusing-Quarter-From-FedEx-FDX-UPS-FWRD-AAWW-ATSG-NSC-ODFL0926.aspx