Up 38% From Its Lows in November, is it Too Late to Buy Shares of This Rebounding Stock?

After bottoming in late November of last year, shares of trucking and freight specialist Old Dominion Freight Line (NASDAQ: ODFL) have staged a sharp rebound. The stock hit a 52-week low around $126 and has since climbed back to about $173 -- a gain of about 38%.

A move like that can make investors feel like they missed the window. And in a sense, they may have. When a high-quality company bounces that much before the underlying business clearly improves, the market is usually starting to price in better days ahead.

So the real question isn't whether Old Dominion is a great business. It is. The question is whether the stock is still offering enough upside to justify buying after such a quick rebound.

Here's a closer look.

Image source: Getty Images.

Pricing is holding up, demand is not

Old Dominion is a less-than-truckload carrier, often shortened to LTL. That means it hauls smaller shipments for many customers, combining them efficiently into shared truck space.

This business can be very profitable when freight demand is healthy, but it can also feel the impact quickly when customers ship less -- and this levered operating model is magnified for Old Dominion specifically, since it owns most of its service centers instead of leasing them. Its business, therefore, is more vertically integrated than many of its competitors, giving it a lot of fixed costs. But when things go well, this means it can see a huge upward swing in profits.

For now, however, demand is weak -- and the company's model is working against it. Third-quarter revenue fell 4.3% year over year to $1.41 billion, and operating income fell 10.2% to about $361 million. Earnings per share declined 10.5% to $1.28.

Behind its revenue decline was a 9% year-over-year decline in LTL tons per day, reflecting a 7.9% drop in shipments per day and a 1.2% drop in weight per shipment. In other words, customers were shipping fewer loads, and those loads were slightly lighter.

But there was also a counterweight: pricing held up. The company said LTL revenue per hundredweight, excluding fuel surcharges, rose 4.7% year over year. A "hundredweight" is simply 100 pounds. So this metric essentially measures the average price per unit of weight shipped. Even in a softer market, therefore, Old Dominion has been able to charge more for the freight it does carry.

Management has tied that pricing strength to service quality. During the company's third-quarter earnings call, CEO Marty Freeman highlighted Old Dominion's 99% on-time service and a cargo claims ratio (essentially a measure of the frequency of freight damage) of 0.1% for the quarter. When a carrier is that consistent, many customers are willing to pay a premium.

Why the rebound changes the setup

If the third-quarter numbers were the full story, the recent stock rebound might look odd. But there's more to the story.

First, the company continues to invest even when conditions are unfavorable. In the third quarter of 2025, Old Dominion generated $437.5 million in operating cash flow. For the first nine months of 2025, operating cash flow was about $1.1 billion. That kind of cash generation gives the company flexibility to keep improving its network, while weaker competitors may be forced to pull back. Patient investors, therefore, likely believe that when demand for freight recovers, Old Dominion could emerge from this period even stronger than it was going into it.

Second, Old Dominion keeps returning capital to shareholders. Over the first nine months of 2025, it used $605.4 million to repurchase shares and paid $177.2 million in dividends. For a company with a market capitalization of $36.4 billion as of this writing, this is substantial.

Still, there are risks to betting on Old Dominion stock now, as the near-term demand picture still has not clearly turned. In a November 2025 operating update, the company said revenue per day fell 4.4% year over year, driven by a 10% decline in tons per day.

So, where does that leave investors after a 38% rebound? In short, investors seem to already be pricing a freight demand recovery in, even though it's not clear that one will occur anytime soon. After all, shares trade at a price-to-earnings ratio of 35 and a forward price-to-earnings ratio of 33. While these ratios could come down quickly if a recovery does ensue and Old Dominion's earnings jump, these are still high premiums. Ultimately, the buying opportunity may have passed for investors who were hoping to buy a clear bargain.

But investors who already own shares should be careful about treating the rebound as a reason to sell. Old Dominion is still doing the hard things right: protecting pricing, delivering top-tier service, investing through the cycle, and returning significant cash to shareholders.

With the company set to report fourth-quarter and full-year 2025 results on Feb. 4, investors should watch to see if volumes start to stabilize or whether the downturn in freight demand persists.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Old Dominion Freight Line. The Motley Fool has a disclosure policy.