Covenant Transportation Q4 Earnings: Is CVTI Cheap at 0.7x Price/Book?

in EARNINGS/INVESTING IDEAS by

Covenant Transportation Group, Inc. (NASDAQGS:CVTI) is scheduled to report Q4 earnings results on Thursday, January 23, 2020. Management will hold an earnings conference call on Friday, January 24, at 11:00 a.m. ET.

The company is expected to report earnings of $0.27/share on revenue of $235.2 million. The consensus earnings per share (EPS) of $0.27/share is based on a poll of 2 analysts and represents a decline of -71.2% over the same quarter last year when the company reported earnings of $0.92/share.

The revenue forecast of $235.2 million based on a poll of 2 analysts implies a year-over-year (YoY) decline of -13.6%. Last year the company reported $272.3 million in revenue for the quarter.

Expected to report EPS decline of -$0.66/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $235.15 $272.27 -13.6%
EPS $0.27 $0.92 -71.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters and met expectations 1 quarter.

What are your expectations from Covenant Transportation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 -$0.08 -$0.08 NM Meet
Q2, 2019 $0.34 $0.35 2.9% Beat
Q1, 2019 $0.21 $0.27 25.6% Beat
Q4, 2018 $0.76 $0.92 21.1% Beat
Q3, 2018 $0.62 $0.66 6.5% Beat
Q2, 2018 $0.50 $0.54 8.0% Beat
Q1, 2018 $0.21 $0.24 14.3% Beat
Q4, 2017 $0.48 $0.50 4.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-22 $16.15 $16.26 0.7% Increase
2019-07-24 $14.65 $15.58 6.3% Increase
2019-04-25 $20.62 $19.13 -7.2% Decline
2019-01-23 $22.23 $23.50 5.7% Increase

Fundamentals And Technical Analysis

Covenant Transportation is currently trading at $13.64/share, down -2.7% for the day. The company is trading at approximately 54.6% of its 52-week high of $24.99/share. The company’s stock price is down -16.1% since the last earnings report and down -0.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 62.86 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NASDAQGS:CVTI Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 10.9x and a forward P/E multiple of 19.0x. Covenant’s current share price also implies a price-to-book (P/B) multiple of 0.7x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $13.64
P/E Ratio 10.9x
P/E Ratio (Fwd) 19.0x
PEG Ratio 0.8
Total Debt to Capital (%) 58.7%
Levered Free Cash Flow -$97.028 million
Enterprise Value / EBITDA 5.0x

Source: Finbox

Company Profile: Covenant Transportation Group, Inc.

Covenant Transportation Group, Inc. is a micro-cap stock with a market capitalization of $258.8 million and a total enterprise value of $587.6 million. The company operates in the Industrials sector and the Road & Rail industry.

Covenant provides truckload transportation and brokerage services primarily in the continental United States. It offers expedited and dedicated services. The company also provides ancillary services, including freight brokerage and logistics services, warehousing, and accounts receivable factoring; and over-the-road truckload services, as well as transportation management, shuttle, and switching services. It serves transportation companies, such as freight forwarders, less-than-truckload carriers, and third-party logistics providers; and traditional truckload customers, including manufacturers, retailers, and food and beverage shippers.

As of December 31, 2018, the company operated 3,154 tractors and 6,950 trailers.

Covenant Transportation Group, Inc. was founded in 1986 and is headquartered in Chattanooga, Tennessee.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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