Saia Growth Accelerates But It May Not Matter

Saia Moves Lower On Strong Earnings 

LTL-shipper Saia’s (NASDAQ: SAIA) revenue growth accelerated for the 3rd consecutive quarter and to a new high but it may not matter. The truckers have been trading like a recession is already here and, based on the FOMC outlook, one may actually be on the way. Until then, demand for trucking services remains high and is driving Saia's results along with a robust expansion plan. The company has already opened two new terminals this year and is planning on accelerating new openings in the current quarter and for the year. 

“We have opened two new terminals this year, and our opening pace will accelerate now that winter weather is behind us,” said CEO Fritz Holzgrefe. “I would anticipate another four terminal openings will be completed by the end of the second quarter and we are still anticipating opening a total of 10 to 15 new locations in 2022.”

Saia Beats On The Top And Bottom Line 

Saia had a great quarter in which revenue accelerated for the fourth consecutive quarter to a record high. The company reported $661.2 million in net revenue for a gain of 36.6% over last year. The revenue also came in above the Marketbeat.com consensus estimate, beating that figure by 430 basis points, on strength in shipments, shipment size, and distance. The company reported a 5.7% increase in loads per day coupled with a 9.5% increase in tonnage per day. This is also in tandem with a 21.4% increase in revenue per hundredweight and a 25.7% increase in shipment volume. 

Moving down the report, the news gets even better because pricing and demand resulted in significant earnings leverage. The company reports a 550 basis point improvement in the operating ratio and $2.90 in GAAP EPS. The EPS is not only up more than 110% from last year but it also beat the consensus by $0.26 or about 875 basis points. Based on the current state of the trucking industry, these results should continue to improve on a sequential basis. If the FOMC sparks a recession, however, that outlook is changed. The caveat for investors is the FOMC may spark a recession but it won’t happen right away. The first interest rate increases, unless larger than even our expectation, won’t be enough by themselves. 

The Analysts Like What Saia’s Hauling 

The analyst's activity in Saia has been mixed this year but take that with a grain of salt. Although there have been a few price target declines and even a downgrade or two the analysts are still very bullish on Saia. The consensus rating is a firm Buy with a price target of $327. That target is down a bit from the recent high but still up in the 3 and 12-month comparisons. Better, the target is still more than 60% above the recent price action and suggests at least some upside for the stock. The institutions are also bullish on the company owning nearly 100% of the shares outstanding. They were selling and that had a negative impact on share prices but that ended in Q4. Since then the institutional activity has been very light and net-bullish. 

The Technical Outlook: Saia Is Testing Support 

Price action in Saia corrected earlier this year under the influence of institutional selling but a bottom may be in place. The caveat is that price action is tepid at this level, there does not appear to be a lot of interested buyers, so support may fail. If price action moves below $198 a move down to $98 is possible.