On Wednesday, BofA Securities adjusted its outlook on ArcBest Corp (NASDAQ: NASDAQ:ARCB) stock, reducing the price target from $102.00 to $99.00 while maintaining an Underperform rating. This revision follows ArcBest's mid-third-quarter update, which revealed volumes falling short of expectations and a rapid deceleration in yield growth.
ArcBest reported a 10% year-over-year decline in August Tons/Day, a slight improvement from the 12.5% drop seen in July, leading to an average quarter-to-date (QTD) decline of 11%. This performance was weaker than BofA Securities' projection of a 10% decrease.
Similarly, the August Weight/Shipment decreased by 9% year-over-year, showing a modest recovery from the 13.7% July decline, averaging an 11% drop QTD against the anticipated 10%.
The company's Revenue/Hundredweight (CWT) for August increased by 4% year-over-year, a slowdown from the 15.4% rise in July, averaging a 9.0% increase QTD, which is slightly above the 7.5% target set by BofA Securities. Less-Than-Truckload (LTL) Revenue/Day in August fell by 7% year-over-year, contrasting with the 1.0% increase in July, and averaged a 3% decrease QTD, compared to the targeted 4.6% decline.
ArcBest reiterated its expectation for third-quarter tonnage to decline year-over-year, attributing some of the downturn to the project-related nature of business gained following Yellow (OTC:YELLQ)'s bankruptcy and the loss of some business to competitors. Despite these challenges, ArcBest anticipates pricing to remain rational and is enacting a 5.9% general rate increase on September 9.
InvestingPro Insights
In light of the recent adjustments by BofA Securities, a closer look at ArcBest Corp (NASDAQ: ARCB) through InvestingPro data and tips can provide additional context for investors. ArcBest's management has been actively buying back shares, signaling confidence in the company's value. Furthermore, analysts forecast that ArcBest will remain profitable this year, an important consideration given the current economic climate. Despite concerns over weak gross profit margins, as shown by a 9.51% gross profit margin for the last twelve months as of Q2 2024, the company's cash flows are robust enough to cover interest payments.
From a financial standpoint, ArcBest's market capitalization stands at $2.49 billion, with an adjusted P/E ratio of 17.14 for the last twelve months as of Q2 2024, which may appeal to value-oriented investors. However, the company has experienced a 6.81% revenue decline over the same period, which should be weighed against its stock performance, which has seen a substantial 26.27% drop over the last six months.
Investors considering ArcBest's stock should note that the company has maintained dividend payments for 22 consecutive years, currently yielding 0.46%, and operates with a moderate level of debt. For those seeking more in-depth analysis, InvestingPro offers additional tips, with 9 more insights available that could further guide investment decisions. Visit InvestingPro at https://www.investing.com/pro/ARCB for a comprehensive understanding of ArcBest's financial health and future prospects.
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