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Chicago, IL – August 11, 2025 – Today, Zacks Equity Research discusses Marten Transport MRTN, Covenant Logistics CVLG and PAMT CORP PAMT.
Link: https://www.zacks.com/commentary/2684332/3-truck-stocks-to-keep-an-eye-on-despite-industry-hiccups
The Zacks Transportation-Truck industry is grappling with persistent supply-chain disruptions, a challenging macroeconomic environment characterized by inflation-induced high interest rates and truck driver shortages.
Despite macroeconomic challenges causing uncertainty in demand, the industry demonstrates resilience, especially for companies prioritizing growth and operational efficiency. Among the companies in the industry that are likely to survive the challenges are Marten Transport, Covenant Logistics and PAMT CORP.
The Zacks Transportation - Truck industry houses truck operators transporting freight to diverse customers, mainly across North America. These companies provide full-truckload or less-than-truckload services over the short, medium or long haul. The range of trucking services these companies offer includes dry-van, dedicated, refrigerated, flatbed and expedited.
Some companies have an extensive fleet of company-owned tractors and trucks, and independent contractor trucks. Besides trucking, most entities offer logistics and intermodal services, as well as value-added services like container drayage, truckload brokerage, supply-chain consulting and warehousing. A few also provide asset-light services to other third-party logistics companies in the transportation sector.
Supply-Chain Disruptions & Weak Freight Rates: Although economic activities picked up from the pandemic gloom, lingering supply-chain disruptions continue to affect stocks in the industry. Below-par freight rates are also hurting the industry's prospects. Highlighting the weak freight demand, the Cass Freight Shipments Index declined 2.4% year over year in June. This measure has deteriorated year over year in each of the past 11 months, which confirms the overall declining trend.
Focus on Cost-Cuts to Drive Bottom Line: Despite signs of cooling inflation, we are by no means out of the woods. We note that the industry has been experiencing supply-chain disruptions and significant levels of inflation, including higher material, labor and transportation costs. The imposition of tariffs adds to the margin pressure. The industry players are focusing on cost-cutting measures and making efforts to improve productivity and efficiency, to mitigate high expenses and a weaker-than-expected demand scenario.
Prolonged Truck-Driver Shortage: The persistent driver crisis in the trucking industry is worsening supply-chain challenges across the United States. Driver scarcity issues limit trucking capacity, making it difficult for trucking companies to meet increased freight demand. American Trucking Associations' chief economist, Bob Costello, expects the trucking industry to be short of more than 160,000 drivers by 2030.
The Zacks Transportation - Truck industry is a 13-stock group within the broader Zacks Transportation sector. The industry currently carries a Zacks Industry Rank #212, which places it in the bottom 13% of 244 Zacks industries.
The group's Zacks Industry Rank, the average of the Zacks Rank of all member stocks, indicates dismal near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group's earnings growth potential. The industry's earnings estimates for 2025 have decreased 36.5% on a year-over-year basis.
Before we present a few stocks from the industry that you may want to buy or hold on to, let us take a look at the industry's recent stock market performance and the valuation picture.
The Zacks Transportation-Truck industry has lagged the Zacks S&P 500 composite while surpassing the Transportation sector over the past year.
The industry has declined 19.7% over this period compared with the S&P 500's appreciation of 19.4% and the broader sector's downslide of 6.9%.
Based on the trailing 12-month EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), a commonly used multiple for valuing trucking stocks, the industry is currently trading at 11.04X compared with the S&P 500's 17.08X. It is above the sector's EV/EBITDA of 9.43X.
Over the past five years, the industry has traded as high as 16.3X and as low as 7.86X, with the median being 12.42X.
Covenant Logistics offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, along with asset-light warehousing, transportation management and freight brokerage capability.
CVLG's cost-control efforts are praiseworthy. CVLG currently carries a Zacks Rank #2 (Buy). The company has surpassed the Zacks Consensus Estimate for earnings in two of the last four quarters (matching the mark on the other two occasions), the average beat being 2.7%.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Mondovi, WI, Marten Transport offers a network of refrigerated and dry truck-based transportation capabilities across its five distinct business platforms — Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.
MRTN's cost-control efforts are impressive. MRTN currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2025 earnings has been unchanged at 32 cents per share over the past 60 days.
PAMT CORP is a holding company that owns subsidiaries engaged in providing truckload dry van carrier services, transporting general commodities throughout the continental United States, as well as in the Canadian provinces of Ontario and Quebec.
PAM has experienced growth not only by substantially increasing its customer base but also through acquisitions. The company currently carries a Zacks Rank #3.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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This article originally published on Zacks Investment Research (zacks.com).
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