Here's Why You Should Give Old Dominion Stock a Miss Now

Old Dominion Freight Line’s ODFL top line is struggling with the economic downturn. The softness in demand is hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

ODFL: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the current-quarter earnings has been revised 10.87% downward over the past 60 days and is pegged at $1.23 per share. Meanwhile, the Zacks Consensus Estimate for 2025 earnings stands at $4.90 per share, indicating a 5.4% fall over the past 60 days.

The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

Dim Price Performance:  The company’s price trend reveals that its shares have fallen 20.1%  compared with the Transportation - Truckindustry’s 15.7% decline.

Weak Zacks Rank: ODFL currently carries a Zacks Rank #4 (Sell).

Bearish Industry Rank: The industry to which Old Dominion Freight Line belongs currently has a Zacks Industry Rank of 224 (out of 245). Such an unfavorable rank places it in the bottom 9% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative in this case.

Headwinds: Old Dominion is grappling with the effects of a weakened domestic economy, as evidenced by a 9.3% decline in LTL tons per day in the second quarter due to lower shipment volumes and lighter weights. While the company maintains that its market share remains stable, the sharp drop in demand underscores the challenges it faces in sustaining growth.

The 5.3% increase in LTL revenue per hundredweight, excluding fuel surcharges, reflects a heavy reliance on pricing strategies rather than volume recovery — a tactic that may have diminishing returns if economic conditions don’t improve. Despite continued investments in capacity and technology, Old Dominion’s results signal a tough operating environment with few signs of near-term relief.

The current decline in volumes indicates rising pressure from competitors who may be adopting more aggressive pricing strategies or optimizing capacity to capture market share. In a contracting market, this heightens the risk of rate competition, which could undermine Old Dominion’s efforts to maintain its yield improvements.

Stocks to Consider

Investors interested in the Transportation sector may consider LATAM Airlines Group LTM and SkyWest SKYW.

LTM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LTM has an expected earnings growth rate of 45% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missed once and met in the remaining one, delivering an average beat of 4.04%.

SKYW currently sports a Zacks Rank #1.

SkyWest has an expected earnings growth rate of 28.06% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 21.92%.

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This article originally published on Zacks Investment Research (zacks.com).

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