In a lot of ways, Forward Air
I love the business (trucking services), I love the company's near-monopoly share in the business, and I love how management is able to wring such high returns out of a business that's fairly easy to understand. On the other hand, it's tough following the company and the stock, because as much as I'd like to buy it, it's overpriced by my model and it can sometimes be unwelcomingly tempting to just push the numbers a little here or there and justify a purchase.
Operationally, I don't know that there was anything to pick at in this quarter. Revenue was up more than 18%, operating income jumped 27% on a nice increase in margins, and earnings per share grew nearly 30%. Cash flow was also up nicely.
Looking at the core airport-to-airport business, revenue was up 22%. Fueling that growth was a 14% increase in tonnage and a better-than-7% increase in pricing (which, even after subtracting fuel surcharges, was up more than 5%). And more could well be on the way, because the company is looking to add facilities at important gateways like Atlanta and Chicago.
I'll also be curious to see what happens with a new service called Forward Air Direct. While Forward Air now offers only line-haul services, this new concept will add in pickup and delivery -- something that should make customers happier, especially the international ones who can't (or don't want to) bother with making those arrangements themselves.
At today's prices, though, the shares just don't look like a bargain to me. And that's a fairly common experience for me across the transportation sector. Still, I suppose I'd rather be holding these shares than those of customers like FedEx
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
