On Monday, Stephens, a financial services firm, adjusted its stance on Schneider National (NYSE: NYSE:SNDR), downgrading the stock from Overweight to Equal Weight and maintaining a price target of $28.00. The transportation company, which operates in various segments including Truckload, Intermodal, and Logistics, has not performed as robustly as expected during the current downturn in the freight industry.
According to Stephens, Schneider National's earnings have shown a lack of resilience, with an estimated 41% decrease in trough earnings per share (EPS) on a last twelve months (LTM) basis compared to the previous cycle. This decline is seen as more significant than that of Knight-Swift Transportation Holdings Inc. (NYSE: KNX), even accounting for factors like dilution from U.S. Xpress Enterprises Inc. (NYSE: USX) and substantial third-party insurance accruals.
Despite Schneider National's diversified operations and significant dedicated market presence within its Trucking fleet, the analyst expressed disappointment in the company's earnings durability during this cycle. The firm's 2024 earnings guide is considered ambitious, and the current risk/reward balance does not appear favorable, leading to the downgrade.
The price target of $28.00 is based on 14.4 times Stephens' forecast for the company's 2025 earnings, which suggests a 17% potential upside from the stock's closing price on Friday. The assessment reflects a cautious outlook on Schneider National's short-term performance, despite expectations of a strong earnings recovery once market fundamentals improve.
InvestingPro Insights
With Schneider National (NYSE: SNDR) facing a downgrade from Stephens, investors are keenly observing the company's financial metrics to gauge its current standing and future prospects. According to recent data from InvestingPro, Schneider National has a market capitalization of $4.21 billion and is operating with a moderate level of debt, which indicates a stable financial structure. The company's P/E ratio stands at 17.67, with a slight adjustment to 17.81 when looking at the last twelve months as of Q4 2023. Despite a challenging environment for the freight industry, Schneider National's revenue for the last twelve months was reported at $5.498 billion.
InvestingPro Tips reveal that analysts predict Schneider National will be profitable this year, which is corroborated by the fact that the company has been profitable over the last twelve months. Moreover, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations, providing it with financial flexibility. These factors could be key as the company navigates through the current downturn in the freight industry.
For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available, including insights on earnings revisions and the company's performance relative to its peers. These can be accessed with a subscription to InvestingPro, now available at a special New Year sale with discounts of up to 50%. For an even greater value, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
Investing in Schneider National may warrant consideration, especially with the company's earnings date on the horizon, April 25, 2024. With a fair value estimate from analysts at $26 and InvestingPro's fair value slightly higher at $26.46, the current price may offer an attractive entry point for long-term investors.
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