As Old Dominion Freight Line, Inc. (NASDAQ:ODFL) released its earnings announcement on 31 December 2018, analyst consensus outlook appear cautiously subdued, as a 6.4% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 21%. With trailing-twelve-month net income at current levels of US$606m, we should see this rise to US$644m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Old Dominion Freight Line to keep growing?
Longer term expectations from the 13 analysts covering ODFL’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 5.7% based on the most recent earnings level of US$606m to the final forecast of US$710m by 2022. This leads to an EPS of $9.26 in the final year of projections relative to the current EPS of $7.39. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 15% to 15% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Old Dominion Freight Line, I’ve put together three essential factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Old Dominion Freight Line worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Old Dominion Freight Line is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Old Dominion Freight Line? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.