3 trucking stocks to avoid as oil prices rise above $90

Oil prices soar amid geopolitical tensions and tight supply, prolonging their rally in a seventh consecutive week. Brent crude climbed 2.37% to end Friday at $93.27 a barrel, while U.S. West Texas Intermediate crude settled up 2.26% to $92.31 a barrel. Rising crude oil prices lead to higher diesel prices, which increases costs for trucking companies.

Fuel is the largest expense of a transportation and freight business after labor costs. Consequently, soaring fuel prices are currently hampering their profits. In addition, labor shortages and rising inflation are aggravating the situation. According to a recent report by Bank of America Global Research, the crisis in the trucking industry shows no signs of abating. Additionally, BofA found that the positive near-term outlook for shippers has fallen, while the negative outlook has increased, reflecting a deterioration in the consensus outlook for the industry.

Given the industry headwinds, we believe TuSimple Holdings Inc. trucking stocks (PST), Werner Enterprises, Inc. (WERN), Yellow Company (YELL) are best avoided now.

TuSimple Holdings Inc. (PST)

TSP in San Diego, California, in a autonomous technology company that develops autonomous technology designed explicitly for tractor-trailers worldwide. It intends to produce a line of purpose-built (Tier 4) L4 autonomous semi-trailers for the North American market.

Last week, TSP announced its intention to continue its “Driver Out” program, gradually expand its reach and achieve commercial viability by launching continuous “Driver Out” paid freight operations in an area of major shipment, such as the “Texas Triangle”, by late 2023. However, ongoing supply chain issues could be a concern.

TSP’s total costs and expenses rose 52.7% year-over-year to $117.73 million in its fiscal third quarter, ended Sept. 30. Its operating loss rose 51.5% from its value a year ago to $115.95 million. Its net loss attributable to common shareholders was $115.49 million, indicating a 13.9% year-over-year increase, while net loss per share fell 68.8% year-over-year at $0.54. Adjusted sound EBITDA stood at negative $81.30 million, down 21.5% from its value a year ago.

The Street expects the company’s EPS to remain negative at least until next year.

TSP shares are down 56% in the past six months and 53.8% year-to-date to close their last trading session at $16.55.

TSP POWR Rankings reflect weak fundamentals. The company has an overall D rating, which translates to Sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. TSP is also rated D in stability and sentiment. Within the Freight trucking industry, it is ranked No. 21 out of 22 stocks.

In addition to the highlighted POWR ratings, one can see the TSP’s growth, value, momentum, and quality ratings. here.

Werner Enterprises, Inc. (WERN)

WERN is a transport and logistics company operating in truck transport services and Werner Logistics. the Based in Omaha, Neb. relate to transport general cargo truck shipments in interstate and intrastate commerce worldwide.

Last month, WERN announced its partnership with Cummins Inc. (CMI), a global energy solutions provider, based on which WERN will start validating and integrating CMI’s 15 liter natural gas and 15 liter hydrogen internal combustion engines into its vehicles. However, the integration is not expected to begin until the second half of 2022.

WERN’s operating revenue rose 23.4% year-over-year to $765.22 million in its fiscal fourth quarter, which ended Dec. 31. However, its adjusted operating margin declined 10 basis points year over year to 13.2%. And its total operating expenses rose 23.7% from the previous year’s value to $666.73 million.

The consensus revenue estimate of $741.36 million for its fiscal first quarter, ending March 2022, indicates a 20.3% year-over-year increase, while the consensus EPS estimate of $0.86 indicates a 26.3% year-over-year increase.

The stock is down 6.6% over the past nine months and 9% over the past month to close its last trading session at $44.04.

It is ranked #15 in the Trucking freight industry. Click here to see WERN’s ratings for Growth, Value, Stability, Sentiment, Momentum and Quality.

Yellow Company (YELL)

Yell, through its subsidiaries, provides a range of transportation services primarily in North America. the Kansas-based Overland Park primarily offers LTL (Least Lot) shipments and supply chain solutions. The company offers various services for the transport of industrial, commercial and retail goods.

YELL’s total operating expenses rose 8.9% year-over-year to $1.25 billion in its fiscal fourth quarter, which ended Dec. 31. Its overall result has been $58.60 million, indicating a 159% year-over-year decrease. Its loss per share rose 137.8% from its value a year ago at $0.88. While its cash and cash equivalents the balance decreased by 34.1% from the prior year quarter to $314.80 million during the year ended December 31, 2021.

Analysts expect the company’s revenue to grow 11.1% year-over-year to $1.33 billion for its fiscal first quarter, ending March 31, 2022. However, its EPS is expected to remain negative for the quarter.

Over the past three months, the stock price has fallen 12% to close its last trading session at $9.82. YELL shares have fallen 22% since the start of the year.

Under the POWR ratings, YELL received a D rating for sentiment and quality. It is ranked #20 in the Trucking freight industry. To view YELL’s additional ratings for Growth, Value, Momentum and Stability, Click here.

TSP shares were trading at $16.60 per share on Monday afternoon, up $0.05 (+0.30%). Year-to-date, the TSP is down -53.70%, compared to a -5.22% rise in the benchmark S&P 500 over the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a master’s degree in economics, she gained knowledge in equity research and portfolio management at Finlatics. Following…

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Felix J. Dixon