Why Covenant Transportation Group Inc (NASDAQ:CVTI) Is An Attractive Stock On Right Now

Covenant Transportation Group Inc (NASDAQ:CVTI) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of CVTI, it is a financially-sound company with a an impressive track record of performance, trading at a great value. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my high-level commentary, take a look at the report on Covenant Transportation Group here.

Good value with proven track record

Over the past few years, CVTI has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, CVTI also outperformed its industry, which delivered a growth of 43.92%. This is what investors like to see! CVTI's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that CVTI manages its cash and cost levels well, which is a crucial insight into the health of the company. CVTI seems to have put its debt to good use, generating operating cash levels of 0.42x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.

CVTI's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if CVTI's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, CVTI's share price is trading below the group's average. This supports the theory that CVTI is potentially underpriced.

Next Steps:

For Covenant Transportation Group, I've compiled three relevant aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for CVTI’s future growth? Take a look at our free research report of analyst consensus for CVTI’s outlook.
2. Dividend Income vs Capital Gains: Does CVTI return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CVTI as an investment.
3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CVTI? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.