Shares of U.S. Xpress Enterprises jumped Wednesday after the Chattanooga-based trucking giant said new digital technologies are improving its margins as the trucking industry rebounds from the spring shutdown of much of the economy.
U.S. Xpress was one of the biggest winners on the New York Stock Exchange on Wednesday following its optimistic outlook in its improved second quarter earnings released Tuesday. U.S. Xpress more than doubled its operating earnings and predicted stronger quarters ahead, helping to raise analysts' outlook for the company. That boosted share prices for U.S. Xpress by more than 28.9% to $8.78 per share —the highest level in more than a year and one of the highest since the company went public again in June 2019.
U.S. Xpress, the nation's fifth largest asset-based truckload carrier by revenue, said Tuesday its operating income totaled $16.3 million on sales of $422.5 million. In the previous year, U.S. Xpress reported operating income of $8.8 million on revenues of $413.9 million.
Bank of America analyst Ken Hoexter raised his outlook for U.S. Xpress from neutral to buy on Wednesday.
"USX is highly leveraged to a rebounding freight volume and rate environment," he said. "While the company has historically operated in the upper-90's operating ratio range, it is beginning to see the first signs of substantial improvement, seeing a 500 bps improvement in its 2Q20 report. "
Hoexter raised his price objective for U.S. Xpress from $6.50 to $9 per share.
In its second-quarter earnings call Tuesday, company CEO Eric Fuller detailed a new strategy that generated more than 500 basis points of operating ratio improvement in its truckload business.
Fuller said the company's new digitally recruited, dispatched and managed asset-based fleet could transform trucking. The new fleet at U.S. Xpress is called Variant and includes load planning and scheduling performed by a new suite of machine learning and artificially intelligent algorithms called the Variant Optimizer. Variant maximizes loaded miles per week, which helps improve both company profits and driver retention, Fuller said.