Werner’s revenue per truck accelerates, but cost pressures lower fourth-quarter earnings expectations

Why did third-quarter results meet guidance but fall short of Goldman Sachs’s earlier expectations?

Werner’s adjusted third-quarter earnings per share were $0.16, within its earlier guidance range of $0.15–$0.16 and in line with the FactSet consensus. After the guidance was released, Goldman Sachs had already lowered its own third-quarter forecast from $0.34 to $0.15.
The company said higher fuel prices, investment in driver recruitment and retention, and adjustments to insurance reserves related to past claims together reduced earnings per share by $0.18 quarter over quarter. Driver investments accounted for $0.06, while fuel and insurance together accounted for $0.12.

Third-quarter weekly revenue per truck in one-way truckload transportation rose approximately 34% year over year, above 28% in the second quarter and Goldman Sachs’s forecast of 26%. Utilization of the existing fleet improved after the restructuring, with miles per tractor up 22% year over year, above 16% in the second quarter and Goldman Sachs’s forecast of 13%.
Revenue per mile rose approximately 10% year over year, similar to the second quarter but below Goldman Sachs’s forecast of 13%. In other words, the acceleration in revenue growth per truck was primarily supported by increased vehicle mileage.
Management said the margin in one-way truckload transportation improved by 800 basis points year over year, while the margin for the overall Truckload Transportation Services (TTS) segment improved by 220 basis points. However, TTS’s adjusted operating ratio excluding fuel surcharges was 95.9%, a deterioration of approximately 140 basis points quarter over quarter, exceeding the average pre-pandemic seasonal deterioration of approximately 50 basis points calculated by Goldman Sachs. A higher operating ratio means operating costs account for a higher proportion of revenue.

The company expects fuel pressure to largely ease in the fourth quarter and higher insurance costs to be largely confined to the third quarter; investment in driver recruitment will continue at a moderate pace to support planned continued fleet growth in 2027.
Goldman Sachs further cut its fourth-quarter earnings-per-share forecast from $0.30 to $0.25, reflecting driver cost pressures and a more conservative margin outlook; the bank had previously lowered the forecast from $0.52 to $0.30 after the earnings guidance. Its full-year 2026 forecast fell from $0.70 to $0.65, while its 2027 and 2028 forecasts remained at $2.20 and $2.85, respectively.
Despite the forecast cuts, Goldman Sachs still expects TTS’s fourth-quarter margin excluding the impact of fuel to improve by 250 basis points year over year and the company’s overall operating profit to rise 164% year over year.

Goldman Sachs believes the truckload freight market is in the early stages of a cyclical turning point: the CASS index, which measures freight volumes, returned to year-over-year growth for the first time after 42 consecutive months, rising 2% and 1.9% in August and September, respectively; spot freight rates excluding fuel remain approximately 20%–30% below their 2021 peak.
The bank expects tight capacity supply to support price increases on contract renewals over the coming years, particularly as new contracts are signed in succession in the first half of 2027. Company management said contract freight rates for bids at year-end and in early 2027 start with double-digit year-over-year increases; the company expects revenue per mile in one-way truckload transportation to rise 10%–13% year over year in the fourth quarter.
Goldman Sachs maintained its buy rating and $49 price target, based on a mid-cycle earnings-per-share forecast of $2.90 and a price-to-earnings multiple of approximately 17 times. Slower-than-expected volume growth, a return of capacity, obstacles to contract price increases or continued cost increases would weaken that assessment.