Covenant Logistics (NASDAQ:CVLG) Misses Q3 Sales Targets

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Covenant Logistics (NASDAQ:CVLG) Misses Q3 Sales Targets

Freight and logistics provider Covenant Logistics (NASDAQ:CVLG) missed Wall Street’s revenue expectations in Q3 CY2024, with sales flat year on year at $287.9 million. Its non-GAAP profit of $1.09 per share was 2.5% above analysts’ consensus estimates.

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Covenant Logistics (CVLG) Q3 CY2024 Highlights:

  • Revenue: $287.9 million vs analyst estimates of $296.2 million (2.8% miss)

  • Adjusted EPS: $1.09 vs analyst estimates of $1.06 (2.5% beat)

  • Gross Margin (GAAP): 23.1%, up from 21.1% in the same quarter last year

  • Operating Margin: 5.6%, in line with the same quarter last year

  • Market Capitalization: $692.1 million

Company Overview

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ:CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Ground Transportation

The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.

Sales Growth

A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Covenant Logistics grew its sales at a sluggish 4% compounded annual growth rate. This shows it failed to expand in any major way and is a rough starting point for our analysis.

Covenant Logistics Total Revenue
Covenant Logistics Total Revenue

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Covenant Logistics’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.6% annually. Covenant Logistics isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses seeing lower sales at this time.

Covenant Logistics also breaks out the revenue for its most important segment, Freight revenue. Over the last two years, Covenant Logistics’s Freight revenue revenue (moving cargo) averaged 2.5% year-on-year declines. This segment has outperformed its total sales during the same period, lifting the company’s performance.

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