Trucking Company Stock Prices Decline Nationally at end of Year
by January 26, 1998 12:00 am 64 views
Stock prices of the major national trucking companies dropped by as much 20 percent during the last month of 1997.
Investors apparently were concerned about overcapacity in the industry after many of the companies placed record orders for new equipment. Trucking companies ordered more than double the number of new trucks during 1997 than the year before, according to statistics released in a trucking industry report by Stephens Inc. of Little Rock.
In past years, the trucking companies have ordered new equipment based on immediate demand. If the demand declines, the companies are left with idle equipment that costs the company to maintain while not producing revenue.
Analysts at Stephens don’t believe the new equipment will be idle. They believe the demand in the industry will continue to grow and revenue for trucking companies will increase by as much as 20 percent this year.
Most of the growth will come from the larger, publicly-traded companies. The smaller trucking companies will experience a decline in revenue as they struggle to compete with the larger companies for drivers.
Other factors affecting the stock prices include the Teamsters contract that expires March 31. Although analysts don’t foresee a strike, the negotiations have been complicated by the disqualification of Ron Carey as union president. A strike could destroy profits at unionized companies while providing unexpected profits for non-unionized companies.
“There are no issues currently on the table that should prevent a negotiated contract settlement and both sides are aware of the ramifications of a strike,” the report states.
J.B. Hunt Transport Inc. of Lowell was one of the few trucking companies whose stock price increased during the final two months of 1997. Investors are gaining confidence that the company’s 33 percent increase in driver pay will be offset by increased utilization and accelerated growth. Analysts predict that Hunt’s stock will reach a price of more than $20 a share this year.