LTL Trucker Saia Hammers Down On Growth

Saia Delivers A Truckload Of Growth 

When Saia NASDAQ: SAIA decided to open a new terminal in Virginia the move was met with some criticism. Although demand within the industry is high and warrants such a move, ultra-tight labor conditions suggest it may be a bigger bite than the company can chew. Well, were here to tell you the decision was not only a good one but led to the second quarter of record results and the company has opened 2 more terminals in the time since. In fact, Saia is planning to open as many as 15 new terminals this fiscal year and it is a move we wholeheartedly support. 

Supply Chain Issues No Roadblock For Saia 

Saia is an LTL or less-than-truckload operator with a full load of growth on the horizon. The company has been working hard to ramp its capacity even while the industry at large struggles to fill driver seats. The impressive part is the company has been able to lower its operating ratio and maintain a very low damage-claim ratio despite hundreds of new dockworkers at its growing network of terminals. 

Saia posted $616.20 million in revenue for the fiscal 3rd quarter which is good for growth of 28% over last year and beat the Marketbeat.com consensus estimate by 680 basis points. The gain was driven by an increase in shipments per day and revenue per hundredweight that resulted in double-digit increases in tonnage delivered and revenue per shipment. Shipment per day increased by 2.3% to drive an 11% increase in tonnage per day while a 14.9% increase in revenue per load drove a near 25% increase in revenue per shipment. As for profitability, the combined impact of volume, pricing, and internal efforts drove the GAAP operating ratio to 82.8% and a company record. 

On the bottom line, SAIA reported $2.98 in GAAP earnings which is nearly double what it posted last year. The GAAP earnings beat the consensus by $0.63 and are compounded by strength at the adjusted level as well. Adjusted earnings of $2.86 beat the consensus by $0.52 and are likely not the last quarter of strong earnings. Based on conditions within the freight industry and Saia’s growth efforts we are expecting the company to set quarterly records on a regular basis for the next several quarters at least. 

“Operationally we continue to perform very well and we have been able to navigate the tight labor market, as well as supply chain disruptions that have caused equipment delivery delays to provide consistent service to our valued customers,” said Sais CEO Fritz Holzgrefe … “Third quarter demand trends were strong and our results reflect the compounding positive effect of the pricing initiatives we have been working on for the past several years.”

Highly Valued Saia Rockets To New Highs 

Saia is a highly valued stock trading at roughly 34X its consensus for earnings but there are some caveats with that valuation. For one, the consensus estimate for earnings is far too low and will likely move higher in the coming weeks if not days. The other is that Saia is still growing, outpacing consensus, and investing in growth so these trends are more likely to accelerate than to flag. 

Technically speaking, shares of Saia surged more than 10% to set a new all-time high and the stock will likely continue to move higher over the long term. Near term, however, there is a risk of profit-taking capping gains and that can be seen in the price action today. Assuming the market can sustain support at or above the $290 level, we would expect to see this stock consolidate within a new range and then move higher as earnings come in. If not, price action may close the gap that formed today before consolidating and making its move higher.