Old Dominion Freight Line (ODFL), YRC Worldwide, Inc. (YRCW): Should You Invest in These Struggling Truckers?

A better way to go

While investors could take a flyer on these evolving trucker stories, a better bet is to stick with best of breed in a capital intensive business like trucking, which means Old Dominion Freight Line (NASDAQ:ODFL). The company is almost exclusively focused on the less-than-truckload segment, which allows it to transport goods for multiple customers on its trucks and economize on fuel costs. It also benefits from barriers to entry in the segment due to the need to have a vast network of service centers and distribution facilities to manage the diverse shipments.

In its latest fiscal year, Old Dominion Freight Line (NASDAQ:ODFL) reported solid financial results once again, with increases in revenues and operating income of 12.1% and 21.9%, respectively, versus the prior year. Like the rest of the industry, Old Dominion Freight Line (NASDAQ:ODFL) benefited from a better pricing environment, as well as a 7% increase in overall shipment volume. More importantly, the company’s operating profit and cash flow hit record highs, providing the required capital to reinvest heavily in an expansion of its fleet and network.

The bottom line

Investors have bid up shares of YRC Worldwide and Arkansas Best and expect them to deliver higher profits in the future. However, they remain at a disadvantage to more nimble competitors that don’t have legacy pension obligations and work rules. Until these companies show sustainable profit gains, investors should stick with a long-term winner, Old Dominion Freight Line (NASDAQ:ODFL).

The article Should You Invest in These Struggling Truckers? originally appeared on Fool.com and is written by Robert Hanley.

Robert Hanley owns shares of Old Dominion Freight Line. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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