Trucking Along
Updated September, 2024
Market/Symbol
NASDAQ:ODFL
Price
$214.331.19%
Market Cap
$46b
PE Ratio
37.46
Average Volume
1.5m
Pricing delayed 2 hours. Nov 21, 2024 9:00 AM
Investment Thesis
Leading The LTL Segment On Service Quality
Old Dominion Freight is the 2nd largest LTL (less-than-truckload) carrier in the US with 13% market share. The business model involves transporting smaller freight shipments that don’t require a full truck. Multiple shipments from different customers are combined into one truck, optimizing space and reducing costs. Carriers consolidate, transport, and deliver these goods utilising a hub and spoke model.
The enviable industry dynamics in ‘Less-than-Truckload’ make the Truckload market look like the Wild West. The industry boasts consistent price growth and disciplined competition, resulting in strong returns on capital. ODFL has been one of the top-performing stocks in the S&P over the past two decades, posting a total return of over 7000%. Importantly, there is room for this company to continue executing its winning strategy and delivering superior returns for shareholders.
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"Old Dominion and Saia have compounded revenues at 10% for a decade, and earnings at 17-20%, on a purely organic and self-funded basis."
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What the Pro's Are Asking
Here are the questions that professional investors are asking before making an investment decision.
Old Dominion cater to a subset of the market and a key question for investors is how much ‘high quality/ high margin’ market share is there out there to capture? We don’t know the answer. It now has 13% of the market and I doubt they can double market share again at the same margin. Remember, there is still modest volume growth in the industry and consistent pricing growth, but there may be less scope for market share gains over the next 10 years than the last.
The company should continue to see further economies of scale but they will be diminishing. There should be continued leverage on its real estate assets as volume grows and density increases over the existing network. People are the biggest expense item and generally increase with growth limiting further gains.
Technology is a growing concern for investors, and they often ask about ODFL’s investments in digital platforms, automation, and data analytics. Old Dominion has a reputation for being technologically advanced in terms of freight tracking, routing, load planning, and customer service portals. This is another area where being one of the industry's largest players lends a competitive advantage as it can leverage any technology expenses over a larger platform.
Investor Materials
Access the most recent investor updates published by the company.
External Insights
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Research
Team
David S. Congdon
Executive Chairman of the Board
Kevin "Marty" Freeman
CEO
Gregory B. Plemmons
COO
Adam N. Satterfield
CFO
Any questions?
Contact: Nirav Karia -
nirav.karia@curationcorp.com
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