ArcBest's (NASDAQ:ARCB) Q3 Earnings Results: Revenue In Line With Expectations

Freight Delivery Company ArcBest (NASDAQ:ARCB) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 1.4% year on year to $1.05 billion. Its non-GAAP profit of $1.46 per share was 6.6% above analysts’ consensus estimates.

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“ArcBest continues to deliver, even in this challenging freight environment,” said Judy R. McReynolds, ArcBest Chairman and CEO.

Company Overview

Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ:ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, ArcBest grew its sales at a mediocre 7.3% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. ArcBest’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.3% annually. ArcBest isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold, which reached 21,095 in the latest quarter. Over the last two years, ArcBest’s units sold were flat. Because this number is better than its revenue growth, we can see the company’s average selling price decreased.

This quarter, ArcBest reported a rather uninspiring 1.4% year-on-year revenue decline to $1.05 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

ArcBest was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, ArcBest’s operating margin decreased by 2.8 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. We’ve noticed many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction, but ArcBest’s performance was poor no matter how you look at it. It shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, ArcBest generated an operating margin profit margin of 5.2%, down 7.5 percentage points year on year. The contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

ArcBest’s EPS grew at a solid 10.6% compounded annual growth rate over the last five years, higher than its 7.3% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into ArcBest’s quality of earnings can give us a better understanding of its performance. A five-year view shows that ArcBest has repurchased its stock, shrinking its share count by 14.2%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For ArcBest, its two-year annual EPS declines of 23.1% mark a reversal from its (seemingly) healthy five-year trend. We hope ArcBest can return to earnings growth in the future.

In Q3, ArcBest reported adjusted EPS of $1.46, down from $1.64 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 6.6%. Over the next 12 months, Wall Street expects ArcBest’s full-year EPS of $4.66 to grow 21.8%.

Key Takeaways from ArcBest’s Q3 Results

We were impressed by how significantly ArcBest blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $71.30 immediately after reporting.

Is ArcBest an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.