卡车运输业绩：即使估值并非完全合理股票也很难有所作为.docx

Table of contentsKey Charts3Truckload4Downgrading WERN to Underperform from Neutral; Lowering KNX Ests 4Cass Shipments IndexReflects Downward Trend inTL Volumes4MDI Suggests Demand Deteriorating, But Still Relatively Healthy4Contract Rates Under Pressure; Likely To Drive Margin Compression5Declines in Contract Rates Typically Lead EPS Declines6WERN Typically Underperforms KNX During Contraction Periods6Valuation7Intermodal9Intermodal Volumes Appear to Have Peaked9Intermodal Pricing Pressure, on Two Fronts9Valuation9Less-than-T ruckload11ISM New Orders Deteriorating; Key Indicator for ODFL11Tough Pricing Comps in Back Half of Year12Tonnage/Shipments Expected to Continue Declining Y/Y12Stock Had a Good Run in June; Further Upside is Relatively Limited13HOLT Analysis14Current Market Implied EBITDA Margins are Below the Historical Average for TL and IM Names14HOLT Valuation Analysis Suggests Current Valuations are Reasonable15Estimate and TP Revisions18Investment Risks20JB Hunt Transport Services (JBHT)21Werner Enterprises, Inc. (WERN)23Schneider National, Inc. (SNDR)25Knight Transportation (KNX)27Old Dominion Freight Line (ODFL)29Less-than-T ruckloadISM New Orders Deteriorating; Key Indicator for ODFLISM New Orders have been declining and approaching the critical 50 mark - which typically translates to lower LTL tonnage and shipments. Not surprisingly, this is generally a key indicator for ODFUs stock performance (see Figure 26).In June, ISM new orders were 50.0, which is a meaningful decline from the peak in December 2017 (67.4). Similarly, ISM new orders less inventories have been deteriorating. The most recent data point of 0.9 is well below the peak in December 2017 (18.9), and decelerated from the May data point of 1.8.Fiaure 24: ISM New Orders705 0 5 06 6 5 5Figure 25: ISM New Orders vs. Inventories Spread Not Siqnalina a Pick Up in Demand6Tunf 819。 8T、THun 9wn SE。 ?un 寸E。 I 17T，un 546Tu8T。 a 卜Ea ZJ，un 9T。9Tun ST。 ?un 寸E。 17T，unSource: FactSetSource: FactSetFiaure 26: ISM vs. ODFL Indexed Stock Price (Base . 700)MUO3S Pxpuma。o o o o o6 2 8 4 0 02 2 1 L 1 6c V ic < 6Tue 8TJU0 8T-三 8TNEO wd< 9Tt;0 9T3 9T9Tue do I STUX 54ISM - New Orders ODFL Stock PriceSource: Company data, Credit Suisse estimatesTough Pricing Comps in Back Half of YearWhile pricing has held strong in 2QTD, with revenue/CWT up 10.4% y/y, comps become significantly more challenging in the back half of the year. Specifically, revenue/CWT (excl. fuel) improved 9.0% y/y in 3Q18 and 10.8% y/y in 4Q18.Additionally, ODFL noted on the Q1 call that it is seeing some aggressive pricing actions from its competitors. While this is currently limited to just a few players, we expect this trend to accelerate as the freight market continues to soften in order to gain market share. While we expect ODFL to remain disciplined on price, the company will likely see pressure on rates (and could possibly lose volumes). As such, we forecast a deceleration in revenue/CWT (excl. fuel) to +4% y/y in both 3Q19 and 4Q19.Fiaure 27: ODFL Rev/CWT (ex. Fuel) (% Chanae Y/Y)12.0%10.0%8.0%6.0%4.0%2.0%Pricing comps are challenging in 2H19Pricing comps are challenging in 2H19LLbLCP 山 6Tom 山68Z 6Toi 8Tol7 8Tom 8Toi NTO寸 ZION 9Tol7 9Tom 9Toz0.0%Source: Company data, Credit Suisse estimatesTonnage/Shipments Expected to Continue Declining Y/YGiven a softening LTL backdrop, we expect tonnage and shipments to continue to fall in the back half of the year (though we recognize comps are somewhat easier). And competitors appear to be taking more aggressive actions in order to gain market share, which will likely be a headwind to tonnage/shipment growth. We note that this is also exacerbated by ODFL's strategy to target lower weight/shipment in order to improve yields and push capacity consuming freight out of the network.Fiaure 28: LTL Tonnaae/Dav (% Chanae Y/Y)Fiaure 29: LTL Shipments/Dav (% Chanae Y/Y)-10.0%9 9r r-I r-I r-I8 8 8 8 6 <rH T 11T O 0 O D D t z m 寸 tO O O寸Source: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesStock Had a Good Run in June; Further Upside is Relatively LimitedAs we can see in Figure 31, ODFL's stock has been improving since the beginning of June. The stock has increased 12% since the beginning of June. However, underlying fundamentals have not improved at the same pace. The stock is currently trading at 17.5x vs. the historical average of 18.7x. Meanwhile, during periods of freight contraction, ODFL's valuation has traded as low as 13.1x. To this end, we believe that further upside is relatively limited for the stock.Figure 30: ODFL Indexed Stock Price to June 3(Base = 100)(Base = 100)Fiaure 31: ODFL Forward P/E (FY2)X X X X X8 6 4 2 02 2 2 2 2X X X X 8 6 4 2 11116Tun 8EQ NEa ?un 9Ea 9Tun SEa tzE 。 寸Iun2UI UIo1- di086 o04T-02T-o o6UIUI4 UI di5 Yr Avg. FY2 P/EEp/一m8 一ms un8cxl Una umoiL UmCOL um8 umcoSource: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesHOLT AnalysisCurrent Market Implied EBITDA Margins are Below the Historical Average for TL and IM NamesThis analysis is based on the HOLT DCF framework and uses our Research forecasts for 2019-2021, assuming 2.5% sales growth for 2022-2023 and solving for the long term EBITDA margins required to justify current valuations. After the explicit forecast of 5 years for all companies, HOLT calculates the terminal value by fading returns on capital and growth towards cost of capital and GDP growth respectively.As we can see, implied EBITDA margins are below the historical median for the TL and IM names, while ODFUs current implied EBITDA margins are above the historical median. SNDR currently has the largest delta between implied and historical margins, followed by KNX.Figure 32: Market implied margins vs. historical median (sorted by difference between market implied and history) 10 year median historical EBITDA margins 10 year median historical EBITDA margins Market implied EBITDA marginsMarket implied vs. historical medianODFLJBHTWERNKNXSNDRSource: Credit Suisse HOLT LensHOLT Valuation Analysis Suggests Current Valuations are ReasonableIn Figure 33 through Figure 37, we show HOLTs analysis of the warranted valuation for TL, IM, and LTL names. The analysis suggests that WERN's warranted valuation implies 1% downside, while ODFL, SNDR, and JBHT each have 2% upside.Figure 33: WERN Warranted Valuation-1%Warranted ValuationAmount (MM)Per Share+ PV Cash Flow Existing Assets2,04929.21+ NPV Cash Flow Future Investments4075.80+ Market Value InvestmentsNA0Total Economic Value2,45635.01-Market Value of Debt & Equivalents3504.99-Market Value of Minority Interest00Partial Year Adjustment280.41Warranted Equity Value2,13430.42Winddown Value/Share24.22Winddown Ratio1.26Shares Outstanding70 1downsideSource: Credit Suisse HOLT LensFigure 34: JBHT Warranted ValuationSource: Credit Suisse HOLT LensWarranted ValuationAmount (MM)Per Share+ PV Cash Flow Existing Assets7,80471.79+ NPV Cash Flow Future Investments3,72134.23+ Market Value InvestmentsNA0Total Economic Value11,525106.02-Market Value of Debt & Equivalents1,79516.52-Market Value of Minority Interest00Partial Year Adjustment1261.16Warranted Equity Value9,85690.66Winddown Value/Share55.27Winddown Ratio1.61Shares Outstanding109upside+2%Figure 35: ODFL Warranted ValuationWarranted ValuationAmount (MM)Per Share+ PV Cash Flow Existing Assets7,95598.62+ NPV Cash Flow Future Investments4,43354.96+ Market Value InvestmentsNA0Total Economic Value12,388153.59-Market Value of Debt & Equivalents3624.48-Market Value of Minority Interest00Partial Year Adjustment320.40Warranted Equity Value12,059149.50Winddown Value/Share94.14Winddown Ratio1.55Shares Outstanding81upside +2%Source: Credit Suisse HOLT LensSource: Credit Suisse HOLT LensFigure 36: KNX Warranted ValuationWarranted ValuationAmount (MM)Per Share+ PV Cash Flow Existing Assets5,91134.49+ NPV Cash Flow Future Investments1,6189.44+ Market Value Investments180.11Total Economic Value7,54744.03-Market Value of Debt & Equivalents1,99011.61-Market Value of Minority Interest20.01Partial Year Adjustment1010.59Warranted Equity Value5,65733.00Winddown Value/Share22.97Winddown Ratio1.44Shares Outstanding171upsideFiaure 37: SNDR Warranted ValuationSource: Credit Suisse HOLT LensWarranted ValuationAmount (MM)Per Share+ PV Cash Flow Existing Assets3,61620.38+ NPV Cash Flow Future Investments2701.52+ Market Value Investments00Total Economic Value3,88621.90-Market Value of Debt & Equivalents7604.28-Market Value of Minority Interest00Partial Year Adjustment520.30Warranted Equity Value3,17917.92Winddown Value/Share16.10Winddown Ratio1.10Shares Outstanding177upside+2%Estimate and TP RevisionsWe derive our target prices using a proprietary discounted cash flow model. We use a consistent discount rate, which is adjusted based on an index that tracks the average stock price changes for the truckload sub-sector. Once we have calculated the company's enterprise value, we add the value of cash on the balance sheet plus any anticipated dividends to be paid, we add estimated values for equity investments, subtract the value of minority interest, and subtract the market value of balance sheet debt to arrive at the value available for equity holders.In Figure 38, we show our prior and revised estimates for Q2 and 2019.Figure 38: Q2 and FY19 Estimate changes2Q192019Old% ChangeCons% Above / BelowNew% ChangeCons% Above / BelowOldNewODFL$2.18$2.12-3%$2.110%$8.00$7.86-2%$7.91-1%JBHT$1.40$1.31-7%$1.38-5%$5.77$5.40-6%$5.62-4%KNX$0.62$0.59-5%$0.62-5%$2.64$2.51-5%$2.58-3%SNDR$0.40$0.38-5%$0.366%$1.53$1.45-5%$1.441%WERN$0.65$0.62-5%$0.65-4%$2.52$2.41-4%$2.56-6%Source: FactSet, Credit Suisse estimatesIn Figure 39, we show our prior and revised 2020 and 2021 estimates.Fiaure 39: 2020 and 2021 Estimate chanaes20202021OldNew% ChangeCons% Above / BelowOldNew% ChangeCons% Above / BelowODFL$8.60$8.40-2%$8.51-1%$9.26$9.03-2%$9.29-3%JBHT$6.71$6.08-9%$6.20-2%$7.80$7.04-10%$6.951%KNX$2.92$2.59-11%$2.65-2%$3.25$2.94-10%$2.882%SNDR$1.69$1.34-21%$1.53-13%$1.86$1.49-20%$1.71-13%WERN$2.61$2.19-16%$2.52-13%$2.75$2.48-10%$2.62-5%Source: FactSet, Credit Suisse estimatesIn Figure 40, we show our prior and revised target prices.Fiaure 40: Taraet Price ChanaesSource: FactSet, Credit Suisse estimatesOldNew%ChangeShare Price% Upside / DownsideODFL$163$152-7%$146.334%JBHT$112$95-15%$88.867%KNX$36$32-11%$33.05-3%SNDR$23$19-17%$17.658%WERN$33$29i-12%$30.60-5%Investment RisksThe risks to our thesis are as follows: A pickup in freight demand, which would lead to increased volumes and more pricing power. A significant tightening in capacity would lead to upward pressure on truckload pricing and drive increased revenue. Higher rail pricing or deteriorating rail service may drive a volume shift to truckload, which would support better pricing and higher volumes. Improvement in the macro environment would lead to increased revenue potential for the truckload carriers.Key ChartsFigure 1: Cass Shipments Index Down Y/Y for 6 Consecutive Months%勿 ? 9 9 9 9 9 % 9 % 42086420246 111 -706560Figure 2: ISM New Orders Dangerously Close to Contraction Territorv81'nf 8Tue 5n NTUef 97一三 9Tue ST'nl- ?uef6TU8E。 8Tun NE0 9E。 9Tunf SEa。 tzE 。 1ZT，unSource: Cass Information SystemsSource: FactSetFigure 3: TL Spot Rates May Find Second Derivative Bottom as Comps Ease.Figure 4: While TL and Intermodal Contract Rates Deterioratina Y/Y6工£ 8工b工 8vue NTdesZ.工e工9L，d aS 9 T,Ae2 9T，ue STd sS工ew6工B2 8T>ON 8工es NEON 二，Ae 工 9E0N9 TAe|/| ?>ON stabiai 17t>on 寸工e5Cass Truckload IndexCass Intermodal IndexSource: Truckstop via BloombergSource: Cass Information SystemsFigure 6: KNX Stock Outperforms WERN During Cass Contraction PeriodsFigure 5: Retail Inventories May Need Further8Tto 815 8Td4 8Tue NTto z.l,d4 9I，t0 9T5 9Td4 9TInTto ST3Retail Inventory/Sales excl. Autos 5-Year AverageCASS ContractionCASS Perf. 1Rank 1Feb-95-Oct-95-4.0%KNX-7.6%Mar-98Jan-99-14.1%WERN1.7%Sep-00-Aug-011 70/KNX-lo. / /o112.2%Jul-04-Mar-09KNX-29.7%14.8%Jun-14May-16-9.2%KNX9.9%Source: Cass Information Systems and FactSetRank 2WERN-25.6%KNX -2.7%WERN 90.6%WERN -24.1%WERN-6.1%Source: U.S. Census BureauAmericas/United States TruckingJB Hunt Transport Services(比日)Rating (from OUTPERFORM) NEUTRAL Price (1 O-Jul-19, US$)87.63Target price (US$) (from 112.00) 95.00 52-week price range (US$)127.44 - 84.84Market cap(US$ m)9,529Enterprise value (US$ m)10,810Target price is for 12 months.Research AnalystsDowngrade to Neutral Downgrade to Neutral: We are downgrading our investment opinion on JBHT to Neutral from Outperform. We have lowered our FY19 EPS estimate to $5.40, from $5.77. We have also reduced our FY20 and FY21 estimates toAllison M. Landry212 325 3716Samantha Yellen$6.08 and $7.04, from $6.71 and $7.80. Our target price falls to $95 (from $112) on account of lower base year (2020) EBIT and a higher discount rate in our DCF model.212 325 7451Brian Wright212 538 1855Risks to our Target Price: Risks to our target price include Class I railroad service and maintenance of an ongoing relationship with Burlington Northern Santa Fe and Norfolk Southern.Valuation Methodology: We derive our target price using a proprietary discounted cash flow model. We start with profit consistent with our earnings estimate of $6.08 per share in 2020 and assume operating profit growth of 50% annually over the subsequent 3-5 year period. Based on our estimate of JBHT's return on incremental invested capital (ROIIC) of 65%, we assume it costs the company a little more than $1.55 of incremental capital (capex + acquisitions - D&A - divestitures +/- working capital) to generate $1.00 of incremental earnings before interest, taxes (EBIT). We use a consi