After surging 15% yesterday in the immediate wake of third-quarter earnings, shares of Arkansas Best Corporation (NASDAQ:ARCB) are on the march again in early Tuesday trading, tacking on an additional 3%, and pushing the trucker back toward its 52-week high of $31.90. But was the news good enough to justify what's now coming close to a two-day 20% gain?

Let's find out.

Arkansas Best's good news...
In the third fiscal quarter of 2013, Arkansas Best reported:

  • 8% revenue growth to $623.4 million
  • Increased average revenue per hundredweight (pounds of cargo transported) by about 0.7%, to $28.67
  • Brought itself to "break-even" revenues for the year to date
  • 117% growth in profits per diluted share, to $0.52 -- despite the fact that a combination of one-time charges and benefits shaved $0.02 per share off of Arkansas Best's take for the quarter

As CEO Judy R. McReynolds pointed out, this wasn't just a good quarter, but actually the "strongest quarter of the year" for Arkansas Best. That shouldn't necessarily come as a surprise, as the company says that its third quarters are "traditionally strong". But management noted that this quarter in particular, it received especial benefits from its higher-margin, non-asset-based businesses such as Panther Expedited Services, which it acquired last year. Such subsidiaries, says the company, showed 45% growth in earnings before interest, taxes, depreciation, and amortization in comparison to year-ago levels.

...and its best news
Probably the best news of all for Arkansas Best, though, is that while rival YRC Worldwide (NASDAQ:YRCW) continues to struggle to extract a new contract from its Teamsters Union, Arkansas Best has already wrapped up negotiations with its union employees. Running from Nov. 3, 2013, through March 31, 2018, the new contract "represents a major milestone for ABF," by winning the company a "level of cost savings" sufficient to cut costs by $55 million-$65 million per year -- even after recent union health, welfare, and pension increases.

What does this mean for the company Well, look at it this way: Arkansas Best has reported GAAP losses in three of the past five years. Savings even at the low end of management's estimate ($55 million) would have sufficed to turn two of those "loser" years into winners, with Arkansas Best booking GAAP profits in each. And in the third of those years, 2009, an extra $55 million in the bank would have at least generated a cash profit -- giving the company an unbroken string five straight free cash flow positive years.

Reason enough for a nearly 20% jump in stock price? I think so, yes.