Schneider National’s rating downgraded amid concerns of freight recession By Investing.com

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On Monday, Stephens downgraded Schneider National (NYSE: NYSE:) from Overweight to Equal Weight and maintained a $28.00 price target. The decision was made as the company acknowledged a deeper and longer-term freight downturn than initially expected, leading to disappointment about the carrier’s resilience and earnings power.

Stephens noted that despite Schneider National operating diversified businesses across Truckload, Intermodal and Logistics and having a significant presence in the more established dedicated trucking market, the company’s earnings have not been as robust as expected. The company estimates that on a trailing-twelve-month (LTM) basis, Schneider’s lowest earnings per share (EPS) could be down 41% from the previous cycle’s low, which could result in it underperforming peers such as Knight-Swift Transportation Holdings.

Stephens’ analysis suggests that Schneider National’s earnings will recover as market conditions improve, but its 2024 outlook may be overly optimistic. The company decided to adjust the rating to Equal Weight due to concerns regarding the current balance of potential risks and rewards.

The price target set by Stephens remains at $28, which is based on 14.4x the company’s 2025 earnings forecast. This target represents an upside of 17% from Friday’s close. This downgrade reflects our cautious stance on Schneider National stock given the current freight industry downturn and the company’s recent performance trends.

InvestingPro Insights

As Schneider National (NYSE: SNDR) faces a Stephens downgrade, a closer look at the company’s financials with InvestingPro can provide additional insight into its current position. With a market capitalization of $4.2 billion and a P/E ratio of 17.67, Schneider appears to be valued in line with its earnings. As of the fourth quarter of 2023, the adjusted P/E ratio reflecting the past 12 months is slightly lower at 17.59. Despite the difficult market, Schneider’s sales remain strong at $5.498 billion, but are down 16.74% over the past 12 months, indicating pressure from the current freight downturn.

From an operating perspective, Schneider maintains a sound financial structure. InvestingPro Tips suggest that the company’s cash flow may be sufficient to cover interest payments and that its current assets may exceed its short-term liabilities, providing some degree of resilience in the face of economic headwinds. Additionally, the company operates with a moderate level of debt, which may provide some flexibility during economic downturns.

Analysts expect Schneider to be profitable this year, which is consistent with the company’s profitability over the past 12 months. This is an important factor for investors considering the stock’s potential for recovery if market conditions improve. With a special New Year sale, InvestingPro subscriptions now offer up to 50% off. Use coupon code for even more value SFY24 Get an extra 10% off a 2-year InvestingPro+ subscription or SFY241 Get an extra 10% off your 1-year InvestingPro+ subscription. With seven analysts downgrading earnings for the coming period, access to the five additional tips listed on InvestingPro can provide a more comprehensive understanding of Schneider’s prospects.

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