Covenant Transportation Group, Inc.: Strong price momentum but may lack support from fundamentals?

Covenant Transportation Group, Inc. relative valuation is UNDERVALUED and it has a fundamental analysis score of 28.

Our analysis is based on comparing Covenant Transportation Group, Inc. with the following peers – P.A.M. Transportation Services, Inc., USA Truck, Inc., Universal Logistics Holdings, Inc., Celadon Group, Inc., Marten Transport, Ltd., Swift Transportation Company Class A, Knight Transportation, Inc., Heartland Express, Inc., Werner Enterprises, Inc. and Roadrunner Transportation Systems, Inc. (PTSI-US, USAK-US, ULH-US, CGI-US, MRTN-US, SWFT-US, KNX-US, HTLD-US, WERN-US and RRTS-US).

Covenant Transportation Group, Inc. has shown underwhelming performance over the last one year while growing strongly over the last month. Covenant Transportation Group, Inc.’s price momentum over the last month, at 8.50% has been better than that over the last year, which was -14.31%. Also from a peer group perspective, Covenant Transportation Group, Inc. has performed better, since the peer group performance was 1.31% over the last month.

Company Snapshot

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It trades at a lower Price/Book multiple (1.30) than its peer median (1.76).
  • The market expects CVTI-US‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • CVTI-US has relatively low profit margins and median asset efficiency.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • CVTI-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While CVTI-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company is likely overinvesting in a business with only median returns.
  • CVTI-US might have enough interest coverage to take-on additional debt prudently.
  • Our analysis rates Covenant Transportation Group, Inc. as UNDERVALUED relative to its peers.

Share Price Performance

From a peer analysis perspective, relative outperformance last month is up from a median performance last year.

While CVTI-US‘s change in share price of -14.31% for the last 12 months is in line with its peer median, its more recent 30-day share price performance of 8.50% is above the peer median. This suggests the company’s performance has improved more recently relative to peers.

Share Price Performance

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Leading, Fading, Lagging, Rising

Relative Valuation

Relative Valuation
Fundamental Score

Covenant Transportation Group, Inc.’s price of USD 19.28 is lower than CapitalCube’s implied price of USD 23.08. CapitalCube believes that at these levels, Covenant Transportation Group, Inc. is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between USD 14.26 and USD 25.22.

Valuation & Peer Metrics

A complete list of valuation metrics is available on the company page.

Company Profile

Covenant Transportation Group, Inc. is a holding company, which engages in the provision of freight and logistics services. Its truckload business is comprised of the following services: expedited haul, dedicated, temperature-controlled and regional solo-driver service; long haul, regional, dedicated and intermodal temperature controlled service; and regional solo-driver and dedicated services in the southeastern U.S. The company was founded by David Ray Parker in 1985 and is headquartered in Chattanooga, TN.

Disclaimer

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