USA Truck stock drops to yearly low

USA Truck Inc. (NASDAQ: USAK) stock dropped to a yearly low of $10.29 on Wednesday. Investors remained concerned on the continuation of the tariffs war between US and China after a deal with Mexico last week. The truckload carrier’s business continues as usual on border commerce despite President Donald Trump hinting that tariffs could be applied.

Investors have considered the company’s stock as a growth prospect and buying a company with a robust outlook at a cheap price is always a good investment. In the upcoming year, USA Truck’s earnings are likely to grow by 27% with an indication of highly optimistic future ahead. The stock price falling to a yearly low is expected to create a buying opportunity.

In the past five years, the company has been experiencing accelerated bottom and top lines growth. The transportation business has been undergoing immense pressure due to the trade war but most of the cost burden will be passed on to the consumer. It is expected that if the consumers won’t absorb the price increases then the shipper appears to have an upper hand in transport cost negotiations and the carrier will likely take certain tariff burden.

During the first quarter, USA Truck experienced a complex environment with dropping spot rates that put pressure on its logistics business, a continued challenging driver market, rising fuel prices, relative seasonally soft first quarter demand, and another unusually difficult weather season.

Despite that, the company grew revenue by 7.2% and trucking revenues grew 20.4%. And, earnings climbed by 38.5% and adjusted earnings jumped by 71.4% year-over-year for the first quarter. The company continued to deepen carrier and customer relationships regardless of market dynamics.

As of March 31, 2019, total debt and lease liabilities were $182.0 million, net debt was $181.4 million and total stockholders’ equity was $83.3 million. Net Debt to Adjusted EBITDAR for the trailing twelve months ended March 31, 2019, was 2.6 times giving proforma effect to the Davis Transfer acquisition.

Shares of USA Truck ended Wednesday’s regular session down 2.54% at $10.37 on the Nasdaq. The stock has fallen over 52% in the past year and over 33% in the past three months.

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