Today's Pickup: On The Punishing Stock Market

One thing that's been notable about this third quarter earnings season and the analyst calls that went with them is that small misses in earnings per share are getting absolutely hammered by stock markets. Revenues are at records, net income are at records, and yet if you fall short by a few cents per share, don't be surprised to see your stock drop double-digits percentage-wise.

U.S. Xpress Enterprises Inc USX had that happen to it last week, when it fell short by about 3 cents per share on consensus net income projections and saw a more than 20 percent decline in its stock price. This occurred despite a mostly strong performance. However, CEO Eric Fuller got the chance to respond to that publicly earlier this week at the Stephens Industrial conference, which the company also chose to webcast. Such juxtaposition is rare. He stuck to his guns: we had a great quarter, we got hammered on insurance costs which are not a recurring problem and our plan is on track. But he did concede that after going public just a few months ago, Friday was a rude awakening to what can happen to you if you're a public company and you disappoint… even a little bit.

Did You Know?

The Federal Motor Vehicle Carrier Safety Administration estimates that driver fatigue may be a factor in 13 percent of accidents involving commercial trucks, and 97 percent of employers in the transportation industry said they "feel the impact of fatigue" in a survey conducted across safety-critical industries.

Quotable

"Our survey showed that 77 percent carriers are much more selective in the shippers and receivers that they are willing to load in/out of since the (ELD) Mandate and that 80 percent of carriers state that there are now facilities they will absolutely not load out of."

— Zipline Logistics in its recurring survey of the ELD mandate and behaviors that have been changed by it

In Other News:

The polarized view of shippers vs. scrubbers. Two different ways of approaching the IMO2020 regulation (The Loadstar)

Rolling back speed limits in B.C. The new lower limits will cover about 570km of road (BC Government News)

Powering sleep apnea devices inside a sleeper berth. New tools designed to improve performance of the systems found in trucks (Sleep News)

Darling, if you want me to be closer to you, get closer to me. Manufacturers are getting closer to their supply chains (WSJ)

Final Thoughts

Do Warren Buffet and Berkshire Hathaway (NYSE: BRK-A) care about OR in its BNSF unit as much as the rest of rail analysts do today? BNSF does release a quarterly financial performance report as a segment of Berkshire Hathaway, though it isn't an earnings report per se. In its report for the third quarter that came out this week, it reported an operating ration of 66.4 percent, up from 65.5 percent in the corresponding quarter of 2017.

If that was a public class 1 railroad, there would be gnashing of teeth and analyst reports lowering the stock rating of the company. But the flip side of the push to lower OR is the idea—just a theory—that the companies not as obsessed with it are going to be building their businesses for the long run rather than short-term profits.

Buffet has always been known as somebody who buys outstanding businesses for the long-run. BNSF's high or might be the ultimate test of that. Ah, to be a fly on the wall in the meetings between BNSF management and their Berkshire Hathaway superiors. It must be interesting.