Stifel Upgrades Werner Enterprises To Buy

• Shares of Werner Enterprises, Inc. WERN have declined 24.86 percent through 2015, dropping to a low of $22.66 on December 18.
• Stifel’s John G. Larkin has upgraded the rating on the company from Hold to Buy, with a price target of $30.
• Larkin believes that the company has a strong management team, robust operating structure and balance sheet, and “ample markets” to sustain its growth.

Analyst John Larkin believes that Werner Enterprises compares favorably against its truckload peers across multiple metrics.

According to the Stifel report, the company trailing 12 month operating ratio of 90.8 percent “sits in the middle of the truckload space, indicating that while they perform favorably compared to multiple players they still exhibit margin expansion opportunity.”

In addition, Werner Enterprises’ net debt to EBITDAR and debt to book capitalization are below those of its peers, suggesting that there still is opportunity for the company to take on leverage to use capital for dividends, share buybacks, acquisitions and other activities.

On a PE basis, Larkin believes that the stock is undervalued, “undervalued both relative to its own historical valuations and relative to the group, and it pays a notable dividend yield.”

The EPS estimates for 2016 and 2017 have been lowered from $1.85 to $1.80 and from $2.10 to $2.00, “to more appropriately reflect anticipated volumes and pricing.”