Old Dominion Freight Line Inc (ODFL, Financial) recently experienced a daily loss of 7.24%, contributing to a 3-month decline of 6.98%. With an Earnings Per Share (EPS) of $5.68, investors may wonder if the stock is fairly valued. This article delves into a valuation analysis to determine whether Old Dominion Freight Line's current stock price reflects its true market value. Read on to explore the financial intricacies and potential of ODFL.
Company Introduction
Old Dominion Freight Line Inc, the second-largest less-than-truckload carrier in the United States, operates over 250 service centers with more than 11,000 tractors. Renowned for its operational discipline and efficiency, the company boasts profitability and capital returns that are significantly superior to its industry peers. Strategic initiatives focus on increasing network density through market share gains and upholding industry-leading service, demonstrated by its ultralow cargo claims, through consistent infrastructure investment. Currently, with a market cap of $39.70 billion and sales of $5.90 billion, the company's financial health and growth prospects stand strong.
Summarize GF Value
The GF Value is a unique valuation metric that presents an intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. When a stock's price aligns closely with the GF Value, it's considered fairly valued, suggesting that its future returns will likely mirror the company's business growth rate. Currently, Old Dominion Freight Line's stock is fairly valued at $182.42 per share, just shy of the GF Value of $190.14, indicating that the stock price is in line with the company's true value.
Financial Strength
Assessing a company's financial strength is crucial before investing. Old Dominion Freight Line's cash-to-debt ratio stands at 5.42, surpassing 87.78% of its peers in the Transportation industry. This robust financial strength, scoring a perfect 10 out of 10, suggests a lower risk of permanent loss for investors.
Profitability and Growth
Investing in consistently profitable companies like Old Dominion Freight Line, which has maintained profitability over the past decade, generally carries less risk. With a remarkable operating margin of 27.97%, it outperforms 88.05% of the companies in the Transportation industry. Furthermore, Old Dominion Freight Line's revenue growth rate of 16.3% ranks favorably within the industry, underscoring its strong profitability and growth potential.
ROIC vs. WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is another way to gauge profitability. Old Dominion Freight Line's ROIC of 26.67 is more than double its WACC of 12.12, indicating efficient cash flow generation relative to capital invested and value creation for shareholders.
Conclusion
In conclusion, Old Dominion Freight Line (ODFL, Financial) is fairly valued with a robust financial condition and impressive profitability. Its growth outpaces 65.65% of competitors in the Transportation industry. For an in-depth look at Old Dominion Freight Line's financials over the past 30 years, you can explore their 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
