QUOTE AND NEWS
SeekingAlpha  Aug 18  Comment 
By Marshall Hargrave: Old Dominion Freight Line (NASDAQ:ODFL) posted 2Q earnings of $0.86 (beating $0.83 consensus) and revenues came in at $703 million (topping $692 million consensus). The company continues to hit on all cylinders, with 2Q...
Market Intelligence Center  Aug 11  Comment 
Old Dominion Freight Line Inc (ODFL) presents a trading opportunity that offers a 2.48% return in just 159 days. A covered call on Old Dominion Freight Line at the $60.00 level expiring on Jan. '15 offers an assigned return rate of 2.48% or...
SeekingAlpha  Aug 3  Comment 
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) Q2 2014 Earnings Conference Call July 31, 2014, 10:30 AM ET Executives Earl Congdon - Executive Chairman David Congdon - President and Chief Executive Officer Wes Frye - Chief Financial...
Benzinga  Aug 1  Comment 
In a report published Friday, Wunderlich Securities analyst Nicholas J. Bender reiterated a Hold rating on Old Dominion Freight Line (NASDAQ: ODFL), and raised the price target from $57.00 to $63.00. In the report, Wunderlich Securities noted,...
Market Intelligence Center  Jul 25  Comment 
With bullish technical indicators and a 2 STARS (out of 5) sell ranking from Standard & Poor’s, Old Dominion Freight Line Inc (ODFL) could be an attractive play for investors according to MarketIntelligenceCenter.com's patented option-trade...
Market Intelligence Center  Jul 23  Comment 
Old Dominion Freight Line Inc (ODFL) traded between $61.94 and $63.51 before closing at $63.25 Tuesday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com’s patented algorithms selected a Jan. '15 $60.00...
Market Intelligence Center  Jul 14  Comment 
Old Dominion Freight Line Inc (ODFL) was identified by MarketIntelligenceCenter.com’s patented algorithms today after trading between $61.53 and $62.14 on Friday before closing at $61.65. A diagonal spread using a long position in the Jan. '15...
TheStreet.com  Jul 7  Comment 
  NEW YORK (TheStreet) -- Deutsche Bank downgraded Old Dominion Freight Line  to "hold" from "buy" and set a $68 price target based on valuation. The stock closed at $64.57 on Thursday. Must Read: Warren Buffett's 25 Favorite Stocks STOCKS...
Benzinga  Jul 7  Comment 
In a report released Monday, Deutsche Bank downgraded Old Dominion Freight Line, Inc. (NASDAQ: ODFL) from Buy to Hold, while increasing its price target from $67.00 to $68.00 per share. Deutsche Bank analysts believe Old Dominion's...
Market Intelligence Center  Jul 1  Comment 
Old Dominion Freight Line Inc (ODFL) traded between $62.29 and $63.79 before closing at $63.68 Monday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com’s algorithms have picked a Oct. '14 $60.00 covered call...




 

Old Dominion Freight Line (ODFL) is a trucking company that primarily ships consumer goods. ODFL is the sixth largest less-than-truckload (LTL) firm in the U.S. based on revenue[1]. As a LTL shipper, Old Dominion consolidates freight from several customers in one trailer-load. Compared to truckload shippers who contract an entire trailer-load to a single client, LTL companies need broad networks of pickup and delivery service centers, as well as larger “breakbulk” facilities where shipments are consolidated and separated. Companies also need complex IT systems in order to track freight status information. The asset-intensive nature of the LTL business provides a barrier to entry for new firms. Besides its primary LTL business, Old Dominion also offers domestic and global expedited (shipments that need to move more quickly than normal service, usually at a higher cost) and logistical services.

As a transportation company, Old Dominion’s earnings are closely tied to the overall health of the economy. The firm maintains a diversified consumer base, with no client accounting for more than 2% of revenues, and limited exposure to the cyclical housing and automotive markets[1]. Another concern is rising fuel prices. Another challenge Old Dominion must contend with is the entry of shipping giants FedEx and UPS into the LTL business. These firms bring extensive resources and strong brand names into the LTL market.

Business Overview

Old Dominion operates as one business segment with four brands: OD-Domestic, OD-Expedited, OD-Global, and OD-Technology[2]. Domestic LTL shipping has historically comprised over 90% of revenues[3]. A focus on higher freight density (metrics include weight per shipment and average revenue per service center) and expansion of its service center network have helped ODFL generate one of the highest operating margins of any public LTL firm.

Business & Financial Metrics[4]

In 2009, ODFL generated a net income of $34.9 million on $1.25 billion in total revenues. This represents a 49.2% decrease on a 19.0% decrease in total revenues from 2008, when the company earned $68.7 million on $1.54 billion in total revenues.

Business Segments

ODFL operates as one reportable business segment but offers its products and services through four branded groups: OD-Domestic, OD-Expedited, OD-Global, and OD-Technology.

Trends and Forces

Old Dominion’s Business is Affected by Economic Conditions

As a transportation company, Old Dominion relies on a healthy economy to keep goods moving about the country. The firm maintains a diversified consumer base, with no client accounting for more than 2% of revenues, and limited exposure to the cyclical housing and automotive markets.[1] However, a slowing economy and low consumer demand will cause a total volume drop in shipments that can hurt Old Dominion’s earnings.

Additionally, many customers use a bidding system, which tends to keep prices fairly competitive. For instance, when Wal-Mart Stores (WMT) needs freight shipped, it asks several shipping firms to submit how much payment they are willing to accept. The lowest bid usually wins the contract. When shipping volume decreases in a weakening economy, small competitors bid down prices in order to win loads so that they can cover the cost of their tractors.

Old Dominion’s Costs Are Affected By Fuel Prices

Like most of its competitors in the transportation industry, ODFL determines shipping rates by charging a base rate plus or minus a change in diesel prices. However, this fuel surcharge is not always fully and immediately transferable to the customer.

ODFL’s Business Model Depends on Maintaining its Non-Union Workforce in a Tight Driver Market

The driver market is the tightest it has been in 20 years, with turnover rate exceeding 100% in some large trucking companies[5]. According to the American Trucking Association, the trucking industry will face a national shortage of 111,000 drivers by 2014[5]. This shortage increases the costs of trucking companies like ODFL as they struggle to attract and retain drivers. In addition, Old Dominion's business model revolves around the flexibility of its non-union workforce, which means its employees are free from union regulations restricting work hours and job functions[6]. Compared to competitors with unionized employees, ODFL’s labor force spends less time idle and more time contributing to profitable operations. The company’s ability to sustain this advantage depends on the maintenance of its non-union labor force.

Competition

Old Dominion Freight Line competes with a range of regional and national transportation and logistics companies. ODFL's direct competition is with other less-than-truckload firms who consolidate cargo from several different customers in one trailer-load. Key competitors in this segment include:

ODFL also competes with truckload carriers who contract entire trailers out to one customer. Competitors in this category include:

References

  1. 1.0 1.1 1.2 ODFL 2007 10-K pg. 6  
  2. ODFL 2007 10-K pg. 3  
  3. ODFL 2009 10-K pg. 18  
  4. 5.0 5.1 ERE.net: Truck Driver Slowdown. Retrieved on July 2, 2008.
  5. ODFL 2007 10-K pg. 8  
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