Arkansas Best Corporation has a brand-new name -- and better earnings news to accompany it. Last week, Arkansas Best announced that it is changing its name to ArcBest Corporation (NASDAQ:ARCB), in order to "more clearly communicate our total value proposition to our customers, our employees and our shareholders through one unified identity."

The newly monikered trucker released its earnings news for fiscal Q1 2014. Here's what they had to say:

  • Revenues for the first fiscal quarter climbed 11%, to $577.9 million.
  • Operating costs grew more slowly, and operating losses shrank by nearly two-thirds.
  • Combined with lower interest expense, this worked to cut net losses by more than half, with ArcBest ending up reporting "only" a $0.20 loss per share on the bottom line.

Good news? Investors seem to think so. Focusing on the fact that ArcBest reported better revenues than it was expected to, investors are forgiving the fact that the company's net loss was far worse than the $0.08 per share loss Wall Street had been forecasting, and bid up ArcBest shares more than 3% in Friday morning trading.

This, in management's view, is the right way to look at the results. ArcBest points out that but for one-time items such as pensions settlement expense (which accounted for about half of the net loss) and the added costs and revenue impact of "severe winter weather" (which caused the other half), it would have actually earned a profit in Q1 -- potentially exceeding analyst expectations. And assuming these one-off charges don't repeat in future quarters, these same analysts predict that "strong operating profit" at its Panther logistics division, combined with "record business levels" at FleetNet, and "positive" trends at ABF Freight, will help ArcBest to earn a profit of $1.98 per share by year end.

Is that going to be enough profit to make ArcBest stock a buy? Perhaps.

Here's why. Assume ArcBest earns its $1.98 per share this year. At today's share price, that works out to a valuation on the stock just under a 20 times earnings. But long-term growth estimates on Wall Street suggest the most Arkansas Best will be able to grow its profits over the next five years, is 12% per year.

Now, 12% growth may not sound like enough to support a 20 times earnings valuation, but consider: According to the latest data from S&P Capital IQ, Arkansas Best generated more than $68 million in positive free cash flow over the past 12 months. That's good enough to knock the stock's valuation down from the 67 P/E currently shown on Yahoo! Finance, all the way to just 15 times free cash flow.

Fifteen times free cash flow still isn't quite cheap enough a price to pay for 12% earnings growth. But if, per analyst estimates, Arkansas Best is about to show much stronger results this year than its trailing numbers have shown us already, then the company's price-to-free cash flow ratio could potentially fall even further as the year progresses. And of course, the more cash the stock generates, the cheaper its valuation at steady share prices.

Long story short, while the company's success isn't certain, the valuation is starting to look more and more reasonable by the day. If business continues to improve, then by year end, this stock could even start to look like a bargain.