Trucking company Arkansas Best Corp reported lower-than-expected quarterly profit on Wednesday due to high fuel costs and workers' compensation, sending its stock down 17percent.
The Ft. Smith, Arkansas-based company posted second-quarter net earnings of $16.2 million, or 64 cents a share, down 17 percent from $19.6 million, or 78 cents a share, a year earlier.
Revenue rose almost 8 percent to $498.5 million.
Analysts' average earnings forecast was 75 cents a share on revenue of $479.7 million, according to Reuters Estimates.
Operating income at the company's biggest unit, ABF Freight System Inc, fell 16 percent to $25.5 million.
Arkansas Best Chief Executive Officer Robert Davidson said the economic decline in the overall freight environment seemed to be lasting longer.
"ABF will continue to carefully manage labor costs and equipment levels to match available freight in our system until economic conditions show meaningful improvement," he said in a statement.
Since the third quarter of 2006, the U.S. trucking sector has suffered from low freight volumes due to lackluster retail sales and declining auto sales, plus the housing sector meltdown.
The industry slowdown has forced many smaller operators and some large trucking companies into bankruptcy. Analysts say as more operators leave the market and reduce the supply of trucks, the remaining operators will benefit.
Arkansas Best shares have had an impressive run this year, more than doubling from a 12-month low of $17.94 on Jan 9. The stock reached a 12-month high of $45.13 on Tuesday.
Edward Wolfe of Wolfe Research wrote in a note for clients, "We continue to believe that the (trucking) stocks are well ahead of themselves on valuation and are discounting large expected increases in pricing that will be extremely difficult to achieve during (the second half of the year and 2009) without a major improvement in the economy."
No comments:
Post a Comment