Monday, April 16, 2007

Trucking Firms Lower on Profit Warning

From the AP

Truckload carrier US Xpress Enterprises Inc. said it would likely post a loss in the first quarter, which compares with a profit last year, citing lower-than-expected freight demand, severe winter weather and rising fuel prices. The news was not entirely unexpected, as the company usually experiences a rough start to the year and carriers throughout the sector have complained of similar headwinds.

The sector also witnessed a downgrade of J.B. Hunt Transport Services Inc. by Edward Wolfe at Bear Stearns, who took the stock to "Peer Perform" from "Outperform," due mostly to the 37 percent it has gained since the start of the year.

Dow theory relies on confirmation of a move by at least two averages. The theory is simple. If business is really doing well, then they will have to ship their goods to market. This in turn is good for transportation companies.

However, the above news is not good for transportation companies. We'll have to see how this news plays out in the big scheme, but for now consider it food for thought.