Old Dominion Freight Line is optimistic about future demand, citing customer conversations indicating lean inventories and potential volume improvements in the new year. January manufacturing data exceeded expectations, with a Purchasing Managers’ Index of 52.6, marking the first positive activity in the industrial complex in 12 months.
The new orders subindex surged to 57.1, the highest since February 2022, indicating future activity growth. Management noted that PMI data typically precedes LTL volumes by a couple of months, requiring continued positive reports for sustained demand improvement. Changes in weight per shipment also reflect demand trends, with the fourth quarter potentially marking a cycle trough.
Old Dominion’s fourth-quarter earnings per share were $1.09, slightly above estimates but lower year over year. Revenue of $1.31 billion was 6% lower y/y, with tonnage per day down 11% y/y. Tonnage declines accelerated in the fourth quarter, with a two-year-stacked comparison showing a nearly 19% drop, potentially signaling a demand turnaround.
Despite inclement weather affecting January demand trends, Old Dominion posted a 6.8% y/y decrease in revenue per day, with tonnage falling 9.6% and yield up 3.9% excluding fuel. The company’s revenue guidance for the first quarter is lower than consensus estimates, with a 4.5% y/y yield increase factored in.
Old Dominion reported a 76.7% operating ratio, slightly worse y/y but better than expected, with salaries, wages, and benefits up y/y despite a decrease in headcount. The carrier has been maintaining excess terminal capacity in anticipation of market improvements, with cost per shipment up 5.6% and revenue per shipment up 4.6%.
The company expects a 150 bps decline in operating ratio in 2026, reflecting cost inflation and employee benefit expenses. Old Dominion targets capex of $265 million this year, down from $415 million in 2025, with a focus on network optimization. Shares of ODFL were up 8.3% on Wednesday, outperforming the S&P 500 amid positive industry trends.
Read more at Yahoo Finance: Old Dominion hoping stars align in 2026