Schneider National SNDR is facing freight market challenges that are affecting its truckload volumes. Escalating operating expenses and supply-chain disruptions are adversely impacting the company’s bottom line, making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
SNDR: Key Risks to Watch
Southward Earnings Estimate Revision:The Zacks Consensus Estimate for first-quarter 2025 earnings has moved 5.6% south in the past 60 days. For 2025 and 2026, the consensus mark for earnings has been revised 10.4% and 6.6% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have fallen 6.1% over the past 90 days compared with the industry’s7.3% decline.
Image Source: Zacks Investment Research
Dull Earnings Surprise History: SNDR has a discouraging earnings surprise history, having missed the Zacks Consensus Estimate in two of the trailing four quarters and surpassed twice. The average miss is 5.11%.
Weak Zacks Rank: SNDR currently carries a Zacks Rank #5 (Strong Sell).
Bearish Industry Rank: The industry to which SNDR belongs currently has a Zacks Industry Rank of 206 (out of 250). Such an unfavorable rank places it in the bottom 17% of Zacks industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.
Headwinds: Market volatility and rising costs continue to challenge SNDR, potentially impacting its growth and earnings in the near term.
Despite signs of improvement in the freight market, SNDR continues to face challenges in aligning supply with demand, especially in the Truckload segment. Carriers are still not being adequately compensated for the value provided, leading to continued attrition of supply.
In the fourth quarter of 2024, while the dedicated business within the Truckload segment showed growth, the overall Truckload business experienced lower network volumes, which partially offset the gains from new business and higher network revenue per truck.
The company's bottom line is significantly affected by the ongoing inflationary environment and supply-chain disruptions, which are driving up overall costs, particularly in the insurance domain, and directly impacting operating expenses. Rising insurance premiums and legal challenges further compound these cost pressures. Moreover, service interruptions caused by external factors, such as hurricanes and disruptions in the Union Pacific network, have negatively affected the service consistency of the Intermodal segment.
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider Alaska Air Group ALK and Golar LNG Limited GLNG.
Alaska Air Group currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. ALK has an expected earnings growth rate of 21.8% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 33.1%. Shares of ALK have risen 103.8% in the past year.
Golar LNG Limited currently sports a Zacks Rank #1 and has an expected earnings growth rate of 16.1% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average beat is 30.24%. Shares of GLNG have surged 90.3% in the past year.
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