Werner (WERN) Up 3.1% Since Last Earnings Report: Can This Continue?

A month has passed since Werner Enterprises (WERN) last reported earnings. Shares rose about 3.1% in that time, underperforming the S&P 500.

Will the recent positive trend continue until the next earnings release, or is Werner headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to better understand the important catalysts.

Werner’s first quarter earnings lag estimates

Werner’s first-quarter 2024 earnings of 14 cents per share missed the Zacks Consensus Estimate of 28 cents and declined 77% year-over-year.

Total revenues of $769.08 million missed the Zacks Consensus Estimate of $795.1 million and declined 8% year-over-year due to a 37.2 decline in Truck Transportation Services (TTS) revenues. million USD and a decrease in logistics revenues by USD 26.2 million.

Adjusted operating income of $18.6 million declined 68% year-over-year. Adjusted operating margin of 2.4% decreased 450 basis points compared to the prior-year quarter.

Segment results

TTS segment revenues declined 6% year-over-year to $551.12 million due to lower fuel surcharge revenues. Adjusted operating income of $22.69 million declined 58% year-over-year due to lower profits from property and equipment sales, lower revenues per total mile driven, net of fuel surcharge, one-way truckloads and overall smaller fleet size. Adjusted operating margin decreased 500 basis points to 4.1%.

Logistics revenues were $202.48 million, down 11% year over year. Adjusted operating loss was $1.18 million compared to adjusted operating income of $6.35 million in the year-ago quarter. Adjusted operating margin decreased 340 basis points year over year.

Liquidity

As of March 31, 2024, Werner had cash and cash equivalents of $60.33 million, compared to $61.72 million at the end of the prior quarter. Long-term debt (net of the current portion) at the end of the reported quarter was USD 596.25 million compared to USD 646.25 million at the end of the previous quarter.

In the first quarter of 2024, the company generated $88.58 million of cash from operations. Net capital expenditures amounted to $19.03 million.

During the reported quarter, WERN repurchased 0.2 million shares for a total consideration of $6.5 million. As of March 31, 2024, WERN had 2.1 million shares subject to share repurchase authorization.

Perspectives

Werner currently predicts TTS truck growth to decline by 6-3% in 2024 (previous forecast: between (3%) and break-even). Net capital expenditure is currently estimated at USD 250-300 million (previously: USD 260-310 million).

The story continues

In line with TTS guidance, WERN projects weekly revenue growth per dedicated truck to increase from break-even to 3% in 2024. One-way truckload revenue per aggregate mile is projected to decline by 6-3%.

Werner expects that in 2024, the average age of trucks will be 2.0 years and the average age of trailers will be five years. The tax rate for the full year 2024 is expected to range from 24.5% to 25.5%.

How have estimates changed since then?

Investors have witnessed a downward trend in estimate revisions over the past month.

As a result of these changes, the consensus estimate moved by -37.59%.

VGM results

Currently, Werner has a great Growth Score of A, although it lags slightly behind its Momentum Score of B. Plotting a somewhat similar path, the stock is rated a C on the value side, placing it in the middle 20% for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. No wonder Werner carries a Zacks Rank #5 (Strong Sell). We expect a below-average rate of return on stocks in the coming months.

Industry player performance

Werner belongs to the Zacks Transportation – Trucks industry. Another stock in the same industry, Landstar System (LSTR), has gained 2.1% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, Landstar reported revenue of $1.17 billion, representing a year-over-year change of -18.4%. EPS of $1.32 in the same period compared to $2.17 a year ago.

For the current quarter, Landstar is expected to report earnings per share of $1.47, representing a -20.5% change from the prior-year quarter. The Zacks Consensus Estimate has changed -0.2% over the past 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Landstar. The stock also has a VGM Rating of B.

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