Here's Why Hold Strategy Is Apt For Werner (WERN) Stock Now
Zacks Investment Research | Aug 20, 2019 10:53PM ET
Amid the sluggish freight scenario, Werner Enterprises, Inc. (NASDAQ:WERN) is taking measures to counteract this challenge. Moreover, the company is consistent in its efforts to improve operational efficiency and reduce fuel costs by maintaining a young fleet of trucks and trailers.
Factors Aiding the Company
To combat the softness in freight demand, the company is making efforts to lower costs, which in turn, is benefiting the bottom line. Evidently, Werner’s earnings increased 3.3% year over year in the second quarter of 2019. As of Jul 25, 2019, the company realized cost savings of $10 million. A further uptick is expected in this regard. Additionally, the company is believed to be witnessing improved efficiency and higher productivity on the back of its software advancements.
Werner is focused on investing in new trucks and trailers to improve operational efficiency and decrease fuel costs. To this end, it aims at maintaining a relatively young fleet of trucks and trailers compared with the industry’s standard. With steady fleet upgrade endeavors, the average age of the company’s truck fleet was 1.8 years as of Jun 30, 2019 compared with 1.9 years a year ago.
Further, the company’s efforts to add shareholder value via dividends and shares repurchases are noteworthy. It has a consistent track record of paying out dividends since 1987. The last dividend hike was in May 2018 when the company raised its quarterly dividend by 29% to 9 cents per share (36 cents annually). With regard to buybacks, the company repurchased 700,000 shares for $21.8 million during the second quarter. Last year, it bought back approximately 2.1 million shares worth $72 million. As of Jun 30, 2019, it had 4.3 million shares remaining under its current buyback program.
Shares of the company have gained 7.5% so far this year on the back of the above positives.
In light of the optimism, we believe, investors should retain this Zacks Rank #3 (Hold) stock in their portfolios at the moment.
Key Picks
Some better-ranked stocks in the broader Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.