We recently issued an updated report on Old Dominion Freight Line, Inc. ODFL.
Old Dominion's total deb-to-total capital ratio at the end of second-quarter 2020 was pegged at 0.05. The reading compares favorably with the figure of 0.13 for its industry. Additionally, the company’s cash and cash equivalents at the end of the second quarter stood at $518.7 million, way above the current maturities of long-term debt figure of $45 million. This implies that the company has sufficient cash to meet its current debt obligations.
Efforts to reward shareholders through dividends and share buybacks are impressive. During 2019, the company rewarded shareholders to the tune of $295.5 million. In first-half 2020, it bought back shares worth $306.8 million and paid out dividends worth $35.9 million. Recently, the company's board of directors declared a quarterly cash dividend of 15 cents per share. The amount will be paid out on Sep 16, 2020, to shareholders of record at the close of business on Sep 2. After giving effect to the three-for-two stock split, announced in March 2020, this dividend represents a 32.4% increase from the dividend paid out in September 2019.
Meanwhile, sluggish freight environment is a major concern for Old Dominion. The adversity is caused by lower volumes stemming from soft freight demand. In first-half 2020, LTL shipments slipped 10.3% and LTL tonnage declined 7.3%. If the sub-par performance persists, the stock might be affected significantly.
Zacks Rank & Stocks to Consider
Old Dominion currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. KNX , United Parcel Service, Inc. UPS and Werner Enterprises, Inc. WERN. Knight-Swift sports a Zacks Rank #1(Strong Buy), while UPS and Werner carry a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, UPS and Werner is pegged at 15%, 7.7% and 8.5%, respectively.
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