Big names like Amazon and Wal-Mart utilize trucking company Covenant Transport.Covenant stock drops after profit warnings
Shares of Covenant Transport Inc. plunged 16.2 percent to a nine-month low Thursday after the company warned that earnings for the third quarter are likely to be only about a third of what they were a year ago.
The Chattanooga-based trucking company said higher depreciation expenses and lower freight revenue will cut quarterly profits from $7.6 million, or 42 cents per share a year ago, to only $2.1 million to $3.2 million, or 12 to 17 cents per share, in the same period this year.
Covenant CEO David Parker said depreciation costs increased $4.6 million to $19.3 million in the three-month period, primarily as a result of lowering the salvage values for tractors being replaced with new models. Covenant said the lower trade-in prices “could continue for an extended period.” Covenant also had a $1.7 million increase in casualty insurance and claims expense in the third quarter of this year over last year due to more accidents in the period. Average freight revenue per tractor declined 1.2 percent from a year ago.
Covenant is due to report its third quarter earnings after the market closes next Wednesday.