Wrapping up Q2 earnings, we look at the numbers and key takeaways for the ground transportation stocks, including RXO (NYSE: RXO) and its peers.
The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.
The 16 ground transportation stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
While some ground transportation stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.8% since the latest earnings results.
RXO (NYSE: RXO)
With access to millions of trucks, RXO (NYSE: RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
RXO reported revenues of $1.42 billion, up 52.6% year on year. This print fell short of analysts’ expectations by 1%, but it was still an exceptional quarter for the company with an impressive beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.
RXO Chairman and CEO Drew Wilkerson said, “RXO executed well in the second quarter despite the prolonged soft freight market. Our Brokerage business outperformed the market, growing volume by 1% year-over-year driven by 45% growth in less-than-truckload volume. We’re seeing early benefits from our newly combined carrier and coverage operations, and we delivered Brokerage gross margin of 14.4% in the quarter. Last Mile continued its impressive run of year-over-year growth, achieving 17% stop growth, the fourth consecutive quarter of double-digit growth. Our cash performance in the quarter was strong, and we increased our cash balance sequentially from the first quarter.”
RXO scored the fastest revenue growth of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $15.31.
Is now the time to buy RXO? Access our full analysis of the earnings results here, it’s free.
Best Q2: Werner (NASDAQ: WERN)
Conducting business in over a 100 countries, Werner (NASDAQ: WERN) offers full-truckload, less-than-truckload, and intermodal delivery services.
Werner reported revenues of $753.1 million, down 1% year on year, outperforming analysts’ expectations by 3%. The business had a stunning quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.9% since reporting. It currently trades at $26.45.
Is now the time to buy Werner? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Heartland Express (NASDAQ: HTLD)
Founded by the son of a trucker, Heartland Express (NASDAQ: HTLD) offers full-truckload deliveries across the United States and Mexico.
Heartland Express reported revenues of $210.4 million, down 23.4% year on year, falling short of analysts’ expectations by 10.4%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Heartland Express delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 1.7% since the results and currently trades at $8.52.
Read our full analysis of Heartland Express’s results here.
ArcBest (NASDAQ: ARCB)
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ: ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
ArcBest reported revenues of $1.02 billion, down 5.2% year on year. This result came in 2.8% below analysts' expectations. It was a softer quarter as it also logged a significant miss of analysts’ EPS and adjusted operating income estimates.
The stock is down 15.3% since reporting and currently trades at $69.38.
Read our full, actionable report on ArcBest here, it’s free.
Landstar (NASDAQ: LSTR)
Covering billions of miles throughout North America, Landstar (NASDAQ: LSTR) is a transportation company specializing in freight and last-mile delivery services.
Landstar reported revenues of $1.22 billion, down 1.1% year on year. This print beat analysts’ expectations by 0.5%. Overall, it was a strong quarter as it also recorded and an impressive beat of analysts’ adjusted operating income estimates.
The stock is down 10.9% since reporting and currently trades at $122.85.
Read our full, actionable report on Landstar here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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