Wabash should benefit as FedEx Ground grows. Image source: FedEx.

If you haven't heard about Wabash National Corporation (WNC -1.36%), it's time to pay attention. The trailer manufacturer's stock is already up 8% year to date after rallying 34% in 2016. Impressive, isn't it? Wait until you hear this: Until Nov. 7, 2016, Wabash was down 7% year to date but has climbed an eye-popping 57% since!

You might've already guessed what sent Wabash soaring, but there could be more to this story than just the "Trump" bump if package delivery behemoth FedEx Corporation's (FDX -1.18%) rapidly rising ground shipments and logistics players like J.B. Hunt Transport Services' (JBHT -2.36%) ongoing fleet expansions are anything to go by. After all, FedEx and J.B.Hunt are just some of Wabash's important customers. So, could this be the beginning of a bull run for Wabash?

Wabash's shipments were weak in 2016, but...

If you look at Wabash's operational performance for 2016, it appears that the stock is largely riding the wave of optimism that has swept industrials since Donald Trump's win. Wabash's new trailer shipments declined 4% to 45,850 units during the nine months ended Sept. 30, 2016 as demand for tank trailers from chemicals and energy markets remained weak. You'll be surprised to know that Wabash is North America's largest manufacturer of liquid transportation systems, and tank trailers are a key product of its diversified products group (DPG) segment.

Wabash, though, gets a major chunk of revenues from its core commercial trailer products (CTP) segment, which manufactures semi-trailers for transportation companies like FedEx and J.B. Hunt. Here's a quick look at the key end markets Wabash serves through its two segments.

Image source: Wabash National.

As you might have guessed, the demand for trailers is tied closely to freight fundamentals which, thankfully, remain strong.

Strong freight is driving demand for trailers

While truck tonnage was unusually volatile in 2016, the American Trucking Association expects overall freight volumes to improve this year, backed by strong housing and retail markets. The Trump administration's boost to manufacturing could further fuel the freight markets. In fact, reports from leading freight transportation analyst company FTR reveal a dramatic jump in trailer orders in the U.S. since September, suggesting that a turnaround may already be under way.

Image source: FTR.

Higher freight tonnage should boost demand for trailers as carriers replace and expand their fleets. J.B. Hunt, for instance, has already outlined plans to replace 2,500 and buy 500 new trailers this year as part of its $477 million capital spending program. Meanwhile, courier service companies like FedEx are pumping big sums of money into ground operations to exploit the e-commerce boom. At the beginning of its ongoing 2017 fiscal year in June, FedEx projected $2 billion worth of capital expenditures on facility expansions and equipment purchases for FedEx Ground for the year. Later in 2016, management hinted at similar spends on FedEx Ground for fiscal 2018.

We may not have customer-wise order numbers for Wabash, but replacement demand is clearly strong, and that should keep the company's sales and profits going this year.

Wait, I haven't told you anything about Wabash's profits yet.

Wabash is a dividend stock again, but is it cheap?

Despite lower shipments and revenues, Wabash's operating income hit record highs, and net income surged 36% year over year during the nine months ended Sept. 30, 2016. At the same time, Wabash has reduced its debt levels aggressively since 2012 and has brought down its debt-to-equity ratio to a very manageable 56% now. That leaves the company with a lot of room to bolster growth via deals that may require external financing.

Encouraged by its strong profit and cash flow trends, Wabash gave investors the perfect Christmas gift by reinstating a quarterly dividend after nearly six years. This is perhaps the biggest testimony of management's confidence in the business going forward.

The question is whether the stock is still reasonable enough to buy after its recent rally.

Fortunately, it is: Wabash is trading under nine times trailing earnings and cash flows each, and a price-to-sales of only about 0.6. That could mean good upside potential in the stock while you enjoy its 1.4% dividend yield.