Forward Air Corp. – Value Analysis (NASDAQ:FWRD) : December 4, 2017

Capitalcube gives Forward Air Corp. a score of 66.

Our analysis is based on comparing Forward Air Corp. with the following peers – Expeditors International of Washington, Inc., Roadrunner Transportation Systems, Inc., FedEx Corporation, Universal Logistics Holdings, Inc., Saia, Inc., Old Dominion Freight Line, Inc. and ArcBest Corporation (EXPD-US, RRTS-US, FDX-US, ULH-US, SAIA-US, ODFL-US and ARCB-US).

Investment Outlook

Forward Air Corp. has a fundamental score of 66 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It’s current Price/Book of 3.35 is about median in its peer group.
  • The market expects FWRD-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • FWRD-US has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, FWRD-US‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While FWRD-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • FWRD-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

FWRD-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 1.99% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 14.65%), and a well-cushioned interest coverage level of 92.25x, FWRD-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 7 chosen peers for the company, only 6 of the stocks have an outstanding debt balance. Companies with no debt include EXPD-US.

FWRD-US has maintained its Quick & Able profile from the recent year-end.

  • FWRD-US‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 128.47x.
  • The increase in its interest coverage to 92.25x from 64.13x (in 2016) was also accompanied by an increase in its peer median during this period to 13.04x from 9.48x.
  • Interest coverage rose 24.56 points relative to peers.
  • FWRD-US‘s debt-EV is similar to its five-year average debt-EV of 1.67%.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (1.99%) and the peer median (14.65%).

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Expeditors International of Washington, Inc. 0 2.34 No interest exp 999
Roadrunner Transportation Systems, Inc. 57.31 0.64 2.43 18.23
FedEx Corporation 21.92 1.63 9.63 46.37
Universal Logistics Holdings, Inc. 36.82 1.1 1.94 22.47
Saia, Inc. 7.38 1.09 16.46 121.3
Old Dominion Freight Line, Inc. 1.47 1.44 205.46 526.21
ArcBest Corporation 31.25 1.26 6.96 56.44
Forward Air Corporation 1.99 2.71 92.25 382.32
Peer Median 14.65 1.35 13.04 88.87
Best In Class 1.47 2.71 No interest exp 999

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Company Profile

Forward Air Corp. engages in the provision of surface transportation and logistics services to air freight market. It operates through the following segments: Expedited Less-Than-Truckload, Truckload Premium Services, Intermodal, and Pool Distribution. The Expedited Less-Than-Truckload segment offers customers local pick-up, delivery, and services including shipment consolidation and deconsolidation, warehousing, customs brokerage, and handling. The Truckload Premium Services segment offers expedited truckload brokerage, dedicated fleet, as well as high security and temperature controlled logistics services. The Intermodal segment includes first and last-mile high value intermodal container drayage services to and from seaports and railheads. The Pool Distribution segment involves in handling and distribution of time sensitive product. The company was founded by Scott M. Niswonger on October 23, 1981 and is headquartered in Greeneville, TN.


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