Heartland Express (NASDAQ:HTLD) Q2 Results: Revenues in Line with Expectations
Cargo delivery company Heartland Express (NASDAQ:HTLD) reported second-quarter 2024 results in line with analysts’ expectations, with revenue down 10.3% year over year to $274.8 million. GAAP loss per share was $0.04, down from earnings per share of $0.10 in the same period last year.
Is now the time to buy Heartland Express? Find out with our full research report.
Heartland Express (HTLD) Q2 2024 Highlights:
Revenue: $274.8 million, slightly below analyst expectations of $275.2 million.
EPS: -$0.04, analysts expected -$0.06 (37.9% higher)
Gross margin (GAAP): 28%, down from 29% in the same period last year
Market cap: $985.8 million
Commenting on the quarterly results and the company’s ongoing efforts, Mike Gerdin, CEO of Heartland Express, said: “Our consolidated results for the three and six months ended June 30, 2024 reflect a sustained period of significant weakness in freight demand, driven by industry overcapacity and ongoing elevated operating costs. While as an organization we are pleased with the operational improvement we have seen compared to the prior period, there is further work to be done and freight demand needs to improve if we are to achieve our previous operating performance target of an operating ratio of 85% or less within the next two years.”
Founded by the son of a truck driver, Heartland Express (NASDAQ:HTLD) provides truckload delivery services throughout the U.S. and Mexico.
Ground Transportation
The growth of e-commerce and global trade continues to drive demand for delivery services, especially for last-mile deliveries, creating opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous vehicles to optimize efficiency and find the most cost-effective routes. Despite the critical services this industry provides, ground transportation companies are still subject to economic cycles. For example, consumer spending can have a significant impact on demand for these companies’ services, and fuel costs can impact profit margins.
Sales growth
A company’s long-term performance is an indicator of the overall quality of its business. While short-term successes happen to all companies, top performers experience sustained, multi-year growth. Over the past five years, Heartland Express has grown its sales at an impressive compound annual growth rate of 14%. This indicates that the company has expanded rapidly and provides a useful starting point for our analysis.
Heartland Express Total Revenue
At StockStory, we place the greatest emphasis on long-term growth, but in the industrial sector, a five-year historical perspective can miss companies that are capitalizing on cycles, industry trends, or catalysts such as new contract wins or product line success. Heartland Express’s annualized revenue growth over the past two years has been 32%, outpacing the five-year trend, indicating strong demand that has recently accelerated. Heartland Express’s recent history stands out, especially given that many similar ground transportation businesses have faced sales declines due to cyclical headwinds.
The story continues
For the quarter, Heartland Express reported lackluster revenue of $274.8 million, down 10.3% year over year, in line with Wall Street expectations. We also like to value companies based on projected revenue growth, but there aren’t enough Wall Street analysts covering the company to get a reliable consensus forecast.
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Operating Profit Margin
Operating margin is a key measure of profitability. Think of it as your net income (your bottom line) excluding the effects of factors that may not be related to the fundamentals of your business, such as taxes and interest on debt.
Heartland Express has managed its expenses well over the past five years, and the company has demonstrated solid profitability as an industrial business, with an average operating margin of 10.7%.
Analyzing profitability trends, Heartland Express’s annual operating margins have fallen by 14.5 percentage points over the past five years, and while margins remain strong, shareholders would like to see Heartland Express become even more profitable in the future.
Heartland Express Operating Margin (GAAP)
In the second quarter, Heartland Express’s breakeven point fell 5.2 percentage points year over year. Heartland Express’s operating margin fell more than its gross margin, likely due to a recent decline in efficiency as general expenses, including sales, marketing, and administrative overhead, increased.
Per share
While analyzing long-term earnings trends can show a company’s historical growth, changes in earnings per share (EPS) over time can show how profitable that growth is. For example, a company can inflate sales by excessively spending on advertising and promotion.
Unfortunately, Heartland Express’s EPS has fallen 18.2% per year over the last five years, while revenue has grown 14%, suggesting that as the company has expanded, its profitability per share has fallen.
Heartland Express EPS (GAAP)
A closer look at the finer details of Heartland Express’s earnings can provide a deeper understanding of the company’s performance. As mentioned above, Heartland Express’s operating margins have fallen by 14.5 percentage points over the past five years. This was the most relevant driver of the earnings decline (excluding the impact on revenue). Taxes and interest expense also affect EPS, but don’t tell us much about the company’s fundamentals.
As with revenue, we analyze EPS over a shorter period of time to ensure we aren’t missing any changes in the business. In the case of Heartland Express, the two-year annualized EPS decline of 47.4% suggests that recent performance is to blame for the poor performance over the past five years. No matter how you analyze the data, these results were bad.
For the second quarter, Heartland Express reported EPS of -$0.04, down from $0.10 in the same period last year. Though down year-over-year, the figure was well above analysts’ expectations. Looking ahead to the next 12 months, Wall Street is optimistic. Analysts expect Heartland Express’ EPS to break even, down from -$0.30 last year.
Key Points of Heartland Express’ Second Quarter Financial Results
I was impressed that Heartland Express beat analyst EPS estimates by a large margin this quarter. Overall, I think it was a very good quarter that should please shareholders. Immediately after the earnings release, the stock price was flat at $12.42.
So, should you invest in Heartland Express right now? When making an investment decision, it’s important to consider its valuation, the quality of its business, and what has happened in the most recent quarter. We cover all of this in our full, actionable research report, which you can read for free here.