Shares of Old Dominion Freight Line (NASDAQ:ODFL) were up 10.9% in February, according to data provided by S&P Global Market Intelligence, after the trucking company posted fourth-quarter results that exceeded expectations. This was due to impressive revenue growth and cost management.
Old Dominion recorded fourth-quarter earnings of $1.95 per share, 62% higher than a year prior and well above the $1.75 per-share average analysts were expecting. Revenue increased 15% year over year, to $1.026 billion, also ahead of estimates, and operating income grew 43% from a year prior, to $218.8 million.
The growth is nice, but Old Dominion is a standout for its ability to control costs. The company recorded an operating ratio -- a measure of total expenses relative to its revenue -- of 78.7%, it's third-consecutive quarter with a sub-80% ratio. For the year, Old Dominion recorded its first-ever operating ratio below 80%, despite increasing employee headcount in 2018.
Old Dominion intends to add 10 service centers in 2019, up from six in 2018, in an effort to gain market share and better handle increased volumes through its network. Still, overall capital spending for the year is expected to decline to $490 million in 2019 from $588 million last year.
Shares of Old Dominion have more than doubled over the past three years as the company and its shareholders have benefited from a strong economy, the growth of e-commerce, and new driver regulations that disproportionately hurt smaller operators.
As long as the U.S. economy remains healthy, Old Dominion should continue to post good results. And when economic conditions do turn south, Old Dominion's efficient operations should help ensure it's able to weather the storm.