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mid-cap

Book Profits on This Mid-Cap Trucking Stock That Has Growth Priced In - SNDR

Dec 21, 2021 | Team Kalkine
Book Profits on This Mid-Cap Trucking Stock That Has Growth Priced In - SNDR

Schneider National, Inc.

SNDR Details

Schneider National, Inc. (NYSE: SNDR) is a transportation and logistics company that offers a diverse range of truckload, intermodal, and logistical services. It operates as one of North America's major for-hire trucking fleets. SNDR is well-positioned to expand its service offerings and client base by leveraging its scalable platform and experienced operations team to acquire high-quality businesses that match its stringent selection criteria. As of December 20, 2021, the company's market capitalization stood at USD 4.55 billion.

Latest News:

  • Consistent Sustainability Efforts: SNDR earned a 2021 SmartWay Excellence Award from the US Environmental Protection Agency (EPA) on December 1, 2021. SNDR has been recognized for its dedication to sustainability for the 12th year consecutively.
  • Dividend Declaration: The firm declared a dividend of USD 0.07 per share to holders of its Class A and Class B common stock in October 2021. It will be payable on January 10, 2022, to shareholders of record on December 10, 2021.

9MFY21 Results:

  • Surge in Topline: The company reported an increase of 22.70% in operating revenues to USD 4.03 billion during 9MFY21 (ended September 30, 2021) compared to USD 3.29 billion during 9MFY20, driven by growth in the Transportation segment.
  • Progress in Bottomline: SNDR reported an increase in net income to USD 271.3 million during 9MFY21 vs. USD 134.8 million during 9MFY20.
  • Leveraged Balance Sheet: As of September 30, 2021, the company had cash & cash equivalents of USD 549.9 million and total debt of USD 307.7 million.

Key Risks:

  • Voting Concentration Risk: Each share of SNDR's Class A common stock has ten votes, whereas each share of Class B common stock has one vote, which concentrates voting power in the hands of a few members of the Schneider family, who control 94% of the vote (100% of Class A common stock and 42% of Class B common stock). This concentration of voting power hampers other shareholders' capacity to influence company matters.

Outlook:

  • FY21 Estimates: SNDR aims to invest roughly USD 300 million in capital expenditures in FY21, according to its Q3FY21 press release. SNDR expects adjusted diluted EPS between USD 2.13 and USD 2.17 in FY21. 

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

SNDR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

SNDR stock has risen 17.84% in the past six months and is currently trading around the higher-band of the 52-week range of USD 20.39 to USD 27.15. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 49.04. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 23.00.

Considering the uptick in the stock price and current valuation, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 25.30, down 1.13%, as of December 20, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.