Old Dominion Fght Line
Old Dominion Fght Line
IBD Stock Analysis
- Shares broke out of flat base Oct. 15 with buy point at 304.32
- Stock is now on track to have a three-weeks-tight pattern
- Add-on entry could be 364.93, but investors should be wary
Industry Group Ranking
Three Weeks Tight
* Not real-time data. All data shown was captured at
1:16PM EST on
Old Dominion is one of the nation’s largest less-than-truckload freight shippers. LTL shippers handle smaller loads that often require expedited delivery. Old Dominion operates 237 service centers nationwide and coordinates with other shippers.
Retailers and manufacturers have been struggling for months to keep store shelves and warehouses stocked, amid bottlenecks at the nation’s largest ports. As a result, demand for expedited shipments through trucking companies like Old Dominion has skyrocketed.
Old Dominion has posted five straight quarters of earnings and revenue growth, thanks to surging demand as retailers reopened and manufacturing came back online after pandemic closures.
In the third quarter, Old Dominion’s earnings jumped 44% year over year to $2.47 a share, while sales climbed 32% to $1.4 billion.
ODFL Stock: Double-Digit Gains
Excluding fuel surcharges, LTL revenue per hundredweight increased 10%. Shipment volume grew 19% and average shipment rate rose 11%.
“At the same time that demand for goods is booming, U.S. trucking capacity is barely above pre-pandemic levels due to microchip shortages limiting new truck production and a severe national driver shortage,” said CFRA Research analyst Colin Scarola in a Nov. 27 research note.
Increased demand for its services means Old Dominion has had to hire more workers. That’s been a challenge in all industries. Chief Executive Greg Gantt said in the third-quarter earnings call the company went to great lengths to find new hires.
“We gave our annual raise in September and, in some cases, we’ve had to increase starting wages, and we’ve had some places where we’ve had referral bonuses and those kind of things,” he said. “We just have to work a little harder at it and do things a little bit differently, whatever it takes to get the folks on board.”
Meanwhile, ODFL stock analysts expect high demand and tight capacity to persist into 2022. However, KeyBanc analyst Todd Fowler wrote in a recent note to clients that comparisons become broadly more challenging. That starts late in the first quarter and into the second quarter of 2022.
“Additionally, easing supply-chain constraints may normalize mix, and for the first time in well over 10 years, the number of terminals operated by public-carriers may increase in 2021/2022,” he said.
ODFL Races Past A Buy Point
Old Dominion stock edged up 0.3% to 358.09 in recent action on the stock market today, amid an overall market downturn Friday. Shares raced past a 304.32 buy point from a flat base on Oct. 15, according to MarketSmith chart analysis. ODFL stock has gained 17.5% since that breakout.
The stock is on track to have a three-weeks-tight pattern after today. It could offer an add-on buy point next week at 364.93. But investors should be weary because market conditions are very weak.
With a Composite Rating of 99, ODFL stock ranks No. 2 in IBD’s Transportation-Truck industry group, which itself is highly ranked at No. 5 out of 197.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
YOU MAY ALSO LIKE:
Need Your Help Today. Your $1 can change life.