ODFL - Embedded Expectations Analysis - 2021 06 22
Old Dominion Freight Line, Inc. (ODFL:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 31.2x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their capacity investments, revenue and shipments growth, and the sustainability of demandSpecifically, management may lack confidence in their ability to significantly invest in increasing capacity this year, sustain their revenue growth rate, and improve tonnage and shipments growth. Furthermore, they may be exaggerating the strength of their growth positioning within the less-than-load (LTL) industry, and they may have concerns about the sustainability of shipping demand. Management may also lack confidence in their ability to improve freight protection and manage line haul costs. Moreover, they may be concerned about pandemic-related pricing headwinds, and they may lack confidence in their ability to recover back to normal business operations
Old Dominion Freight Line is a less-than-truckload (LTL) motor carrier providing regional, inter-regional and national LTL services, which include expedited transportation. In addition to the company's primary LTL services, the company provides a range of services including container drayage, truckload brokerage and supply chain consulting. The company also provides access to its systems through multiple gateways that provide its customers and employees flexibility and access to information. The company employs vehicle safety systems, on-board and hand-held computer systems, freight handling systems and logistics technology to reduce costs and transit times.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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