Last Update 10 Dec 25

Fair value Decreased 0.51%

ARCB: Free Cash Flow Will Drive Upside As Freight Cycle Recovers

Analysts have trimmed their average price target on ArcBest by about $0.40 per share, reflecting slightly lower fair value and profit margin assumptions, even as they highlight improving revenue growth prospects, operating leverage to a freight upturn, and a still-attractive valuation backdrop.

Analyst Commentary

Recent Street research reflects a divided but generally constructive view on ArcBest, as analysts weigh the companys long term earnings algorithm and operating leverage against ongoing macro and pricing uncertainties.

Bullish Takeaways

Bullish analysts highlight ArcBests long term earnings growth runway, pointing to managements mid term targets and plans for margin expansion and EPS growth through 2028.
Several notes emphasize ArcBests high operating leverage to a freight cycle recovery, arguing that even modest shipment and yield improvement could drive outsized profit and free cash flow growth.
Valuation is seen as attractive for investors seeking LTL exposure, with bullish analysts characterizing the shares as a relatively inexpensive way to participate in a freight upturn.
Improved network stability and service levels are viewed as supportive of execution on the multiyear plan, underpinning confidence that management can deliver on its stated growth and margin objectives.

Bearish Takeaways

Bearish analysts remain cautious that ArcBests opportunity set is still closely tied to macro conditions, with current guidance implying that earnings progress could falter if the freight backdrop softens.
Transactional pricing remains a key concern, with some seeing it as a risk to sustaining in line or better than market LTL yield improvement and thus to achieving targeted margin expansion.
There is skepticism that the company can reach its 2028 EPS aspirations without a supportive freight upturn that delivers at least low single digit shipment growth and mid single digit LTL yield growth.
For more cautious investors, the recent reduction in some price targets signals that execution risk around the long term plan, particularly on pricing discipline and cost control, still warrants a more measured stance on the stock.

What's in the News

ArcBest expanded its share repurchase authorization on September 15, 2025, increasing remaining capacity to $125 million under its equity buyback plan (Key Developments).
From July 1, 2025 to October 31, 2025, ArcBest repurchased 212,346 shares for $16.05 million, bringing total buybacks under its long running program to 6,908,708 shares, or 28.07 percent of shares, at an aggregate cost of $407.04 million (Key Developments).
Management reiterated that ArcBest is actively evaluating acquisitions. They emphasized a disciplined approach focused on strategic fit, technology capabilities, and alignment with its long term growth strategy, while balancing M&A with organic investment and capital returns to shareholders (Key Developments).

Valuation Changes

Fair Value has edged down slightly from about $81.42 to $81.00 per share, reflecting a modest reduction in modeled intrinsic value.
Discount Rate has decreased marginally from approximately 8.61 percent to 8.58 percent, implying a slightly lower required return on equity risk.
Revenue Growth assumptions have risen slightly from about 3.41 percent to 3.55 percent, indicating a modestly more optimistic top line outlook.
Net Profit Margin expectations have fallen slightly from roughly 3.31 percent to 3.17 percent, signaling a more conservative view on future profitability.
Future P/E multiple has increased modestly from about 14.11x to 14.59x, suggesting a small uplift in the valuation multiple applied to forward earnings.

Investments in technology, digital pricing, and asset-light solutions are driving operational efficiency, higher margins, and positioning ArcBest for future revenue growth.
Focus on tailored services, workforce training, and analytics strengthens customer retention and competitiveness as supply chain complexity and e-commerce demand rise.
Ongoing market softness, competitive rate pressure, rising labor costs, and leadership transitions threaten revenue growth, margin expansion, and operational flexibility.

Catalysts

About ArcBest

An integrated logistics company, provides ground, air, and ocean transportation solutions worldwide.What are the underlying business or industry changes driving this perspective?

The company is seeing strong success capturing new core LTL customers and expanding its pipeline, particularly through investments in sales and integrated logistics solutions, setting the stage for future shipment growth and top-line revenue acceleration as e-commerce and domestic supply chain complexity increase.
Broad deployment of AI-driven optimization tools-such as real-time route and dock management systems-are driving measurable productivity gains and cost savings, which are expected to translate into improved net margins and operational earnings as automation and technology adoption intensify across the industry.
Continued expansion of the digital quote pool and dynamic pricing capabilities, supported by integrations with TMS providers and 3PLs, enable better freight matching and sharper pricing intelligence, positioning ArcBest to capture incremental profit and yield growth as shippers demand increasingly flexible and tech-enabled services.
Ongoing shift toward Managed Solutions and Asset-Light business, with double-digit growth and improved profitability in these segments, supports revenue diversification and higher-margin earnings potential, aligning with changing customer needs amid e-commerce growth and omnichannel supply chain adoption.
Strategic investments in tailored solutions, advanced workforce training and proprietary analytics are enhancing customer retention, operational agility, and service quality, boosting ArcBest's competitive positioning in an environment where domestic re-shoring and heightened demand for resilient, value-added logistics solutions are long-term tailwinds.

ArcBest Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming ArcBest's revenue will grow by 3.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 3.9% today to 3.2% in 3 years time.
Analysts expect earnings to reach $147.2 million (and earnings per share of $7.08) by about September 2028, down from $158.3 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $165.2 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.4x on those 2028 earnings, up from 10.3x today. This future PE is lower than the current PE for the US Transportation industry at 24.6x.
Analysts expect the number of shares outstanding to decline by 2.87% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.56%, as per the Simply Wall St company report.

ArcBest Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

ArcBest continues to face ongoing softness in the freight environment, marked by weak industrial production, a sluggish housing market, and macroeconomic uncertainty (including tariffs and interest rates), which could suppress shipment volumes and revenue growth for an extended period.
A significant portion of shipment growth is coming from easier-to-handle or SMB customers with lower revenue per hundredweight, which, while operationally efficient, may limit overall revenue and yield expansion, placing long-term pressure on revenue per shipment and net margin growth.
Persistent industry overcapacity and soft rates in both Asset-Based and Asset-Light segments-particularly exacerbated by excess truckload capacity-create a competitive environment with potential for ongoing rate pressure and limited pricing power, risking erosion of net margins and earnings.
Labor costs remain elevated due to annual contractual increases for union employees and the need to proactively add labor (and use more purchased transportation) to serve volume spikes, compounding operational costs at a time when shipment weight and manufacturing volumes are soft, squeezing operating income.
The transition to a new CEO, President, and changes at the Board level introduces execution and strategic uncertainty; any failure to maintain the current pace of technological innovation or manage integration/disruption (such as NMFTA classification changes) could impede cost efficiency initiatives and degrade company earnings and financial flexibility over time.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $88.667 for ArcBest based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $130.0, and the most bearish reporting a price target of just $72.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.5 billion, earnings will come to $147.2 million, and it would be trading on a PE ratio of 15.4x, assuming you use a discount rate of 8.6%.
Given the current share price of $71.52, the analyst price target of $88.67 is 19.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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