Schneider National, Inc.

SNDR Details

Schneider National, Inc. (NYSE: SNDR) provides surface transportation and logistics solutions in North America. Its operating segments are 1) Truckload, providing freight services by company employed drivers through either one-way shipments (Network) and dedicated long-term contracts, 2) Intermodal, comprising of door-to-door container on flat car (COFC) services through a combination of rail and dry transportation, and 3) Logistics, offering freight brokerage services to third party operators.

Step Towards Sustainable Transportation: On August 31, 2021, SNDR stated that it would deploy a large number of battery-electric trucks (BEVs) as part of its effort to reduce greenhouse gas emissions. As a result, SNDR will add 50 Freightliner eCascadias, its first commercial Class 8 battery-electric truck — to its Southern California intermodal operations starting in FY22, making it one of North America's largest battery-electric trucks fleets.

Quarterly Dividend: On July 26, 2021, the company declared a quarterly dividend of USD 0.07 per common share, paid on October 08, 2021, to shareholders of record on September 10, 2021.

Q2FY21 Results: The company reported YoY growth of 31.76% in operating revenues to USD 1.36 billion in Q2FY21 (ended June 30, 2021) compared to USD 1.03 billion in Q2FY20. The transportation segment, which accounted for 92.26% of the total revenue in Q2FY21, reported YoY growth of 32.01%.  Net income for Q2FY21 increased to USD 106.5 million from USD 46.5 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents (including short-term investments) of USD 539.6 million and total debt of USD 404.9 million.

Key Risks: Each share of SNDR's Class A common stock has ten votes, whereas each share of Class B common stock has one vote. This concentrates voting power in the hands of a few members of the Schneider family, who control 94% of the overall voting power (100% of Class A common stock and 42% of Class B common stock), limiting the ability of other shareholders to influence corporate decisions.

Outlook: In its Q2FY21 earnings release, the company stated that it expects to clock adjusted diluted EPS to the tune of USD 1.85 – 1.90 in FY21 and incur capital expenditures in the range of USD 325 – 350 million.

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's share price has increased 5.33% in the past three months and is currently close to the mid-point of its 52-week range of USD 19.96 to USD 27.15. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 48.43. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 26.17. Considering the slight uptick in the stock price, a surge in top and bottom-line, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 22.73, down 0.53% as of October 11, 2021, 2:34 PM ET.

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

* All forecasted figures and industry information have been taken from REFINITIV.