The trucking sector is enjoying some pretty good days. Recovering economic growth and high demand for commodities has kept demand strong, while capacity constraints (namely, a shortage of quality drivers) have put a damper on supply growth. Accordingly, most trucking companies are reporting strong growth, and US Xpress (NASDAQ:XPRSA) is no different.

Revenue for the fourth quarter (after subtracting fuel surcharges) grew almost 25% over last year, and net income more than doubled from last December's quarter. The fourth quarter also marked the 12th straight quarter of year-over-year growth, and the company was able to improve its operating margin to 4% from 2.8% in the year-ago period. Even with this improvement, though, US Xpress' operating margin is below the industry average and also below those of operators such as Arkansas Best (NASDAQ:ABFS) and Old Dominion (NASDAQ:ODFL).

What might provide reason for optimism, though, is that US Xpress doesn't want to be a "generic" trucking company. Rather, it's focused on growing businesses that are more specialized, such as dedicated contract service and expedited rail service.

Revenue for the dedicated contract business grew 92% in the fourth quarter, while the expedited rail business grew 134%. Although the businesses combined to account for only about one-quarter of overall revenue, continued growth in these segments should help insulate US Xpress from an inevitable cyclical decline.

On the downside, this growth is not yet translating into positive free cash flow. Though the company should be able to lower its capital expenditures in the coming years, "should" can be a very dangerous word, and the company is projecting flat to slightly negative FCF for 2005.

Although negative FCF is not rare in the trucking space, Fools looking at these shares need to keep in mind that sustainable FCF growth is a key to long-term prosperity for companies and investors alike. Accordingly, Fools who possess an inclination toward "fundamentals first" may want to wait to see improvements in operating margins and FCF before driving these shares into their portfolios.

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Fool contributor Stephen Simpson, CFA, has no ownership interest in any stocks mentioned.