Will This Analyst Downgrade Hurt Old Dominion Freight Line (ODFL) Stock Today?

 

NEW YORK (TheStreet) -- Deutsche Bank downgraded Old Dominion Freight Line  (ODFL) to "hold" from "buy" and set a $68 price target based on valuation.

The stock closed at $64.57 on Thursday.

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STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates OLD DOMINION FREIGHT as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate OLD DOMINION FREIGHT (ODFL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ODFL's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 15.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ODFL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
  • OLD DOMINION FREIGHT has improved earnings per share by 12.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, OLD DOMINION FREIGHT increased its bottom line by earning $2.40 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.40).
  • Net operating cash flow has significantly increased by 56.71% to $99.57 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.25%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.35% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: ODFL Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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