Stock (Symbol) |
Old Dominion Freight Line (ODFL) |
Stock Price |
$62 |
Sector |
| Retail & Travel |
Data is as of |
| October 5, 2015 |
Expected to Report |
| Oct 28 – Nov 2 |
Company Description |
 Old Dominion Freight Line, Inc. (Old Dominion) is a less-than-truckload (LTL) motor carrier providing regional, inter-regional and national LTL service and logistics services. In addition to its LTL services, it offers a range of services including international freight forwarding, ground and air expedited transportation, container delivery, truckload brokerage, supply chain consulting, warehousing and consumer household pickup and delivery. Its infrastructure allows it to provide next-day and second-day service within each of its six regions covering the continental United States, as well as inter-regional and national service between these regions. As of December 31, 2014, it operated through 222 service center locations, of which it owned 176 and leased 46. As of December 31, 2014, it owned 6,907 tractors. As of December 31, 2014, it owned 27,259 trailers. Source: Thomson Financial |
Sharek’s Take |
 Old Dominion Freight Line (ODFL) is the cat’s meow of the trucking industry. The trucking company of choice for shipping less than full truckloads of merchandise has a modern fleet of trucks and boasts on time deliveries exceeding 99% with damage claims of 0.33%. ODFL stock has been a true winner the past five years — and is now on a dip from $82 to $62. Investors were concerned about the industry after a low-quality trucking company missed estimates. But this morning ODFL reported numbers that just missed estimates by a penny, so it seems to me the issue is overblown and I will be buying ODFL in the Growth Portfolio today. The charts in this article are from Q3 and I will be updating them shortly. |
One Year Chart |
 Old Dominion is entering a period of slower growth, which may explain the stock’s drop this year. Estimates show low-double digit growth the rest of 2015 then 15% growth the first 2 qtrs of 2016. I think 17x earnings is reasonable for the stock considering the Est. LTG is 15%.In 2015 Q2 the company had 8% revenue growth and 16% profit growth, beating the street by 2 cents, which was the 4th consecutive beat in the last year. Since I just started coverage of ODFL this month, I don’t know is estimates have been increasing or decreasing during the past year. |
Fair Value |
 ODFL has had a great five years, but the trucking industry is cyclical so there is risk of a downturn. But this company is best in class, and has a $200 million stock buyback program to support the stock when it falls (bought $30 million in stock last qtr).
My Fair Value is a reasonable 17x earnings. I feel ODFL can get back into the $70s next year and perhaps $80 further out. |
Bottom Line |
 Old Dominion Freight Line is a stock I think we can buy-and-hold and make a mid to high teens return in. The stock is on a dip, and there’s the possibility it could return to its old highs which would be a solid return on our investment. On the other hand a downturn in the industry could send the shares lower, in which case management would buy back shares.
ODFL will rank 21st of 29 stocks in the Growth Portfolio Power Rankings. It doesn’t meet the safety standards of the Conservative Stock Portfolio and doesn’t have the timliness for the Aggressive Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
21 of 29Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
