On Monday, BofA Securities adjusted its outlook on Saia Inc. (NASDAQ: NASDAQ:SAIA), reducing the share price target to $484 from the previous $645, while continuing to endorse the stock with a Buy rating.
The adjustment followed Saia Inc.'s first-quarter earnings report, which showed earnings per share (EPS) of $3.38, falling short of the anticipated $3.45. The results led to a significant 20% drop in Saia's stock price, a contrast to the S&P 500's slight increase of 1%.
Saia's quarterly performance revealed a 6% year-over-year increase in daily tonnage to 21.8k tons, though this did not meet the projected 7.5% growth. Daily shipments saw a 15.7% rise to 33k, just under the 16.4% forecast. The average weight per shipment decreased by 3% year-over-year to 1,392 pounds, which was actually less of a decline than the forecasted 7.6%.
Revenue metrics also reflected lower than expected figures. Revenue per hundredweight, excluding fuel, was reported at $22.26, marking a 10.5% increase year-over-year but still below the forecasted 12.3%. Similarly, revenue per shipment, excluding fuel, grew by 1.4% to $294, again falling short of the expected 3.8% growth.
In terms of revenue and operating income, Saia's $755 million in revenues represented a 14% increase from the previous year, but it was $25 million less than the anticipated 18% growth. The company's operating income rose to $118 million, a 19% year-over-year increase, yet it was $4 million short of expectations.
The operating ratio showed a 60 basis point improvement year-over-year at 84.4%, but was 10 basis points above the forecasted figure. Despite the lower than expected performance in various metrics, the underlying structural growth narrative for Saia remains intact.
However, BofA Securities suggests that a revised target multiple may become standard, taking into account reduced growth forecasts and the approaching tougher comparative figures from last year's impact of Yellow (OTC:YELLQ)'s bankruptcy.
InvestingPro Insights
In light of the recent earnings miss by Saia Inc. and the subsequent adjustment of the price target by BofA Securities, it is worth considering additional insights provided by InvestingPro. Saia's stock price has experienced significant volatility, with data showing a sharp 17.95% decline in the last week alone. This price action aligns with the InvestingPro Tip that the stock is currently in oversold territory according to the Relative Strength Index (RSI), potentially indicating a buying opportunity for investors who believe in the company's fundamentals.
InvestingPro Data also reveals that Saia is trading at a high Price/Earnings (P/E) ratio of 31.1, which is above the adjusted P/E ratio for the last twelve months as of Q1 2024. This indicates that the stock is trading at a premium relative to its near-term earnings growth, a point of consideration for value-oriented investors. Additionally, the company's Price/Book ratio stands at 5.6, which may suggest that the stock is valued highly against its book value assets.
For investors looking for more comprehensive analysis, there are 13 additional InvestingPro Tips available for Saia Inc., ranging from analysts' earnings revisions to profitability predictions. To access these tips and gain deeper insights into Saia's financial health and stock performance, visit https://www.investing.com/pro/SAIA. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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