Market Intelligence Center  Sep 2  Comment 
A covered call identified by MarketIntelligececenter.com's patented algorithm on Werner Enterprises Inc (WERN) could yield about 5.53% (18.86% annualized, for comparison purposes only) in 107 days. Pair a long position in the stock with the Dec....
MarketWatch  Aug 28  Comment 
Werner Enterprises Inc. said on Friday Chief Executive Greg Werner will retire, after eight years in the position, and 40 years at the company. As a result, the trucking company said it elected C.L. Werner, the company's founder and chairman of...
Market Intelligence Center  Aug 26  Comment 
MarketIntelligenceCenter.com's option-trade picking algorithms have identified an attractive covered-call trade on Werner Enterprises Inc (WERN). Look at the Dec. '15 $25.00 covered call for a net debit in the $23.81 area. This trade has a...
Forbes  Aug 18  Comment 
Werner Enterprises (WERN) declared a regular quarterly cash dividend of $.060 per common share payable to stockholders of record at the close of business on October 5, 2015. This dividend is a $.010 per share increase compared to the Company's...
Benzinga  Aug 14  Comment 
Thomas Werner, CEO and president of SunPower Corporation (NASDAQ: SPWR), spoke with Melissa Lee on CNBC's Fast Money about challenges and opportunities for the solar industry and his company. He thinks that current sell-off is irrational and...
Wall Street Journal  Jul 21  Comment 
Tight capacity helped the truckload carrier push pricing for shipping customers higher in the second quarter
Market Intelligence Center  Jul 2  Comment 
After Wednesday’s trading in Werner Enterprises Inc (WERN) the algorithms behind MarketIntelligenceCenter.com's Artifical Intelligence Center picked out a trade that offers a 4.12% or 8.91% (for comparison purposes only), while providing 8.57%...


Werner Enterprises (WERN) is a trucking company that ships consumer goods, groceries, and industrial parts. The firm is one of the top 5 truckload carriers in the U.S., with $2.1B in revenues in 2007[1]. As a truckload carrier, Werner sells an entire trailer-load to a single customer, as opposed to less-than-truckload firms who consolidate freight from several customers into one trailer-load. Besides its primary trucking business, Werner earns ~14% of its revenue from truck brokerage, intermodal shipping, and international freight forwarding services[2].

As a transportation company, Werner’s revenues are closely tied to the overall health of the economy. The company’s focus on retail and grocery products (73% of goods shipped) limits its exposure to the housing and auto markets[2]. However, lower demand in these two hard-hit industries have led competitors to enter Werner’s core markets, looking for business[3]. Another concern is rising fuel prices, which resulted in an additional cost of $23M to the company in 2007, only $14.9M of which it was able to recover through fuel surcharge revenues[4].

The economic slowdown of 2007 has led to a consolidation of the trucking industry[5]. Industry analysts estimate that nearly 1,000 small carriers went bankrupt in the first quarter of 2008 under the strain of record fuel prices, lower freight volumes, and the increased cost of capital needed to comply with new environmental regulations[6]. Given the tougher economic conditions, Werner’s position as one of a handful of asset-based trucking firms with a debt-free balance sheet gives it an advantage over competitors who have to divert some cash flow to repay their debts.

Business Financials

Werner operates two business segments: Truckload (86% of revenues) and Value Added Services (14% of revenues)[1]. Revenues totaled $2.1B in 2007, a 0.5% decrease from 2006[1]. 2007 was a tough year for the shipping industry, which was hampered by a weak economy and record fuel prices. Higher fuel prices resulted in an additional cost of $23M to the company in 2007, only $14.9M of which it was able to recover through fuel surcharge revenues[4]. Additionally, Werner faced excess truck capacity because it had bought a large number of new trucks in 2005 and 2006 to postpone the purchase of pricier trucks required under the 2007 EPA engine emissions standards[7]. These factors contributed to Werner’s declining margins in 2007.

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WERN Annual Report[1]

Truckload Segment (86% of revenue, 91% of operating income)

While a number of Werner’s competitors have chosen to focus on narrow service offerings, Werner offers a range of trucking options including medium- and long-haul dry van, temperature-controlled vans, expedited, flatbed, and dedicated contract service (when trucking firms contract out a portion of their equipment and employees to one client for a specified time). WERN is expanding its dedicated contract services, which utilizes 40% of the firm’s tractor fleet[8]. The company’s top 50 customers consist of 46% retail and consumer products, 27% grocery products, 18% manufacturing/industrial, and 9% logistics and other[2].

Value Added Services (VAS) Segment (14% of revenue, 9% of operating income)

Werner’s VAS segment is a non-asset based transportation and logistics provider. This division does not have its own shipping fleet, but contracts with third-party carriers to move goods. VAS operations include truck brokerage, freight management, intermodal shipping, and international freight forwarding. This segment also includes Werner Global Logistics, formed in 2006 and licensed to operate as an ocean transport intermediary, freight forwarder in China (where the company has established a wholly owned foreign entity in Shanghai), and third-party air carrier[9].

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WERN Annual Report[7]
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WERN Annual Report[7]

Trends and Forces

Werner’s Business is Susceptible to Economic Conditions

As a shipper of consumer products and retail merchandise among other things, WERN relies on a healthy economy to keep goods moving about the country. A slowing economy and low consumer demand will cause a total volume drop in shipments that can hurt Werner’s earnings. The company’s focus on retail and grocery products (73% of goods shipped), limits its exposure to cyclical sectors like the housing and auto markets[2]. However, lower demand in these cyclical industries cause competitors to seek additional business in Werner’s core markets. 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.

Werner’s Costs Are Affected By Fuel Prices

Since 2004, diesel prices have more than tripled from $1.50 per gallon to $4.72 per gallon in May 2008 [10]. Like most of its competitors in the transportation industry, Werner 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 (WERN has historically been able to recover ~70-90% of fuel price increases)[8]. Higher fuel prices resulted in an additional cost of $23M to the company in 2007, only $14.9M of which it was able to recover through fuel surcharge revenues[4]. In order to hedge against rising fuel costs, Werner has expanded its dedicated contract services (when trucking firms contract out a portion of their equipment and employees to one client for a specified time), which comprise 40% of the firm’s tractor fleet[8]. Compared to other types of truckload shipping, dedicated contract services are less sensitive to fuel price volatility because clients pay a fuel surcharge for all miles driven, regardless of whether the trucks are empty, off-route, or idling.

WERN’s Operations Are Subject to Government Regulation

The transportation industry is subject to a number of state and federal rules on issues such as insurance requirements, environmental standards, safety requirements, etc. In 2004, the Department of Transportation reduced the amount of time that drivers can spend behind the wheel[11]. And in 2002, the Environmental Protection Agency instituted new guidelines designed to reduce diesel truck emissions by 2010[12]. The latest stage in this process came into effect January 2007, after which all newly manufactured truck engines have to comply with a set of more restrictive engine emission requirements[4]. Trucks manufactured with the new engines have a purchasing price ~$5,000 to $10,000 higher than older models, are less fuel-efficient, and have higher maintenance costs[4]. To delay the cost impact of these new emission standards, Werner purchased significantly more new trucks in 2005 and 2006 than it normally buys each year[4]. This allowed WERN to postpone purchases of trucks with the 2007-standard engines until 2008[4].

The Trucking Industry Faces Labor Supply Risks

The driver market is the tightest it has been in 20 years, with turnover rate exceeding 100% in some large trucking companies[13]. According to the American Trucking Association, the long-haul segment of the trucking industry faced a national shortage of 20,000 drivers in 2007, a number that will swell to 111,000 by 2014[13]. This shortage will increase the costs of trucking companies like WERN as they struggle to attract and retain drivers.

WERN Has Customer Concentration Risks

Werner’s top 10 customers accounted for 40% of 2007 revenue (the firm’s largest client, Dollar General (DG), comprised 8%), so customer concentration risks exist for WERN[2]. The loss of a major client will have a significant impact on the company's balance sheet.

Competition and Market Share

Werner competes with a range of regional and national transportation and logistics companies. The trucking industry is highly fragmented because of low barriers to entry. There are roughly 360,000 trucking companies (96% operate fewer than 28 tractors and 82% operate fewer than 6) [14].

Market share figures assume trucking industry revenue of $357.7B in 2006[5]. Several of the listed companies earn a portion of revenues outside of transporting goods, such as warehousing and logistics. These instances usually account for less than 10% of the total sales.

Note: A parenthesis around the figure indicates a negative number, i.e. (5.4%) is a decrease of 5.4%.

WERN vs. Competitors (2007)
Company Revenue (billions USD) Net Income (millions USD) 1 Year Sales Growth Operating Ratio # of Tractors # of Trailers Market Share
Werner Enterprises $2.1[1] $75[1] (0.5%)[1] 93.4%[1] 8,250[4] 24,855[4] 0.6%[1]
YRC Worldwide (YRCW) $9.6[15] ($638)[15] (3.0%)[15] 97.6%[15] 26,137[16] 86,462[16] 2.7%[15]
Conway Inc (CNW) $4.4[17] $147[17] 3.9%[17] 94.0%[17] 45,378 (tractors and trailers)[18] 1.2%[17]
J.B. Hunt Transport Services (JBHT) $3.5[19] $213[19] 4.9%[19] 75.7%[19] 10,308[20] 60,614[21] 1.0%[19]
Landstar System (LSTR) $2.5[22] $110[22] (1.1%)[22] 92.8%[22] 8,603[23] 14,333[23] 0.7%[22]
Arkansas Best (ABFS) $1.8[24] $57[24] (2.4%)[24] 95.0%[24] 0.5%[24]
Old Dominion Freight Line (ODFL) $1.4[25] $72[25] 9.5%[25] 90.7%[25] 5,016[26] 19,513[26] 0.4%[25]
Saia (SAIA) $1.0[27] $18[27] 11.6%[27] 96.1%[27] 3,579[28] 11,449[28] 0.3%[27]
Universal Truckload Services (UACL) $0.7[29] $18[29] 6.0%[29] 95.9%[29] 36,000[30] 2,900[30] 0.2%[29]
Vitran (VTNC) $0.7[31] $14[31] 30.4%[31] 96.6%[31] 0.2%[31]
Heartland Express (HTLD) $0.6[32] $76[32] 3.5%[32] 78.1%[32] 0.2%[32]
Knight Transportation (KNX) $0.6[33] $63[33] 5.8%[33] 83.0%[33] 3,527[34] 8,809[34] 0.2%[33]


  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 WERN 2007 10-K pg. 16  
  2. 2.0 2.1 2.2 2.3 2.4 WERN 2007 10-K pg. 2  
  3. Morningstar Market Report 2008 pg. 1
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 WERN 2007 10-K pg. 4  
  5. 5.0 5.1 UACL 2007 10-K pg. 4  
  6. U.S. News and World Report: High Fuel Costs Threaten Bankruptcy for Truckers. Retrieved on July 31, 2008.
  7. 7.0 7.1 7.2 WERN 2007 10-K pg. 20  
  8. 8.0 8.1 8.2
  9. WERN 2007 10-K pg. 1  
  10. U.S. Energy Information Administration: U.S. No.2 Diesel Retail Sales By All Sellers. Retrieved on June 27, 2008.
  11. U.S. Department of Labor: Truck Drivers and Driver/Sales Workers. Retrieved on July 2, 2008.
  12. DieselNet: Emissions Standards. Retrieved on July 2, 2008.
  13. 13.0 13.1 ERE.net: Truck Driver Slowdown. Retrieved on July 2, 2008.
  14. TruckInfo.Net Truck Info: Stats. Retrieved on July 28, 2008.
  15. 15.0 15.1 15.2 15.3 15.4 YRCW 2007 10-K pg. 17  
  16. 16.0 16.1 YRCW 2007 10-K pg. 4  
  17. 17.0 17.1 17.2 17.3 17.4 CNW 2007 10-K pg. 18  
  18. CNW 2007 10-K pg. 12  
  19. 19.0 19.1 19.2 19.3 19.4 JBHT 2007 10-K pg. 15  
  20. JBHT 2007 10-K pg. 7  
  21. JBHT 2007 10-K pg. 16  
  22. 22.0 22.1 22.2 22.3 22.4 LSTR 2007 10-K pg. 18  
  23. 23.0 23.1 LSTR 2007 10-K pg. 4  
  24. 24.0 24.1 24.2 24.3 24.4 ABFS 2007 10-K pg. 19  
  25. 25.0 25.1 25.2 25.3 25.4 ODFL 2007 10-K pg. 17  
  26. 26.0 26.1 ODFL 2007 10-K pg. 5  
  27. 27.0 27.1 27.2 27.3 27.4 SAIA 2007 10-K pg. 13  
  28. 28.0 28.1 SAIA 2007 10-K pg. 12  
  29. 29.0 29.1 29.2 29.3 29.4 UACL 2007 10-K pg. 21  
  30. 30.0 30.1 UACL 2007 10-K pg. 3  
  31. 31.0 31.1 31.2 31.3 31.4 VTNC 2007 10-K pg. 10  
  32. 32.0 32.1 32.2 32.3 32.4 HTLD 2007 10-K pg. 13  
  33. 33.0 33.1 33.2 33.3 33.4 KNX 2007 10-K pg. 14  
  34. 34.0 34.1 KNX 2007 10-K pg. 4  
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