Sell: Forward Air (FWRD)
From The Periscope Report
Updated from Investment Digest 769, May 20, 2015
We are downgrading Forward Air (FWRD) to a SELL after it missed our earnings estimate. Management provided guidance for this quarter with revenue growth of 1% - 5% over last year. Net earnings were expected to be $0.57 - $0.61 per share, up from $0.51 per share last year. The sell-side was at $0.58 per share. We said FWRD would beat the mean estimate by at least two cents and the stock would get a nice bump on the news. We were wrong. Revenue declined 4% YoY to $238.6 million, which missed estimates by $8.2 million. Net earnings increased 12% to $0.57 per share, which missed our estimate by three cents. The stock lost 2% after the miss.
Management gave a tepid outlook for the next quarter, with revenue growth expected to be in the range of 1% - 5%. Net earnings are expected to be $0.61 - $0.65 per share, compared to $0.58 per share a year ago. Included in this range is an estimated $0.03 per share negative impact from lower fuel surcharges. We have a ‘one strike and you’re out policy’ so we are compelled to lower FWRD to a SELL for five reasons: 1) earnings came in on the low end of guidance, 2) revenue missed guidance completely, 3) earnings missed the sell-side estimate, 4) earnings missed our estimate, and 5) guidance for the next quarter was below the consensus estimate.
Tom Byrne, The Periscope Report, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602, 406-465-4663, August 1, 2016