Evercore ISI: Saia’s third-quarter volumes and earnings beat expectations, but revenue metrics excluding fuel were soft

Where did third-quarter results outperform?

Saia reported third-quarter revenue of 982.5 million dollars, above Evercore ISI’s estimate of 964.9 million dollars and the market estimate of 967 million dollars. Earnings per share were 3.41 dollars, also above the firm’s and the market’s estimates of 3.31 dollars and 3.30 dollars, respectively.
Operating income was 122.3 million dollars, above the firm’s estimate of 117.5 million dollars. Operating costs were 87.6% of revenue, below the firm’s estimate of 87.8%, meaning the share retained as operating income was slightly higher.

Average daily freight tonnage rose 8.9% year over year in the third quarter, above Evercore ISI’s estimate of 8.5%. Average daily shipments rose 0.8%, slightly below the firm’s estimate of 1.0%. Tonnage grew significantly faster than shipments, indicating that the average shipment was heavier.
Revenue per hundredweight rose 7.4% year over year, above the firm’s estimate of 6.0%. Revenue per less-than-truckload shipment rose 16.1%, also above the estimate of 13.9%. Heavier average shipments and higher revenue per unit of weight together corresponded with the increase in revenue per shipment.

Excluding fuel, revenue per hundredweight fell 2.2% year over year, a larger decline than Evercore ISI’s estimate of 1.3%. Revenue per shipment rose 5.8%, also slightly below the firm’s estimate of 6.1%.
This contrasts with revenue metrics including fuel, all of which exceeded the firm’s expectations: volumes and overall revenue were strong, but revenue per unit excluding fuel was relatively weak.

Evercore ISI believes that most key metrics exceeding expectations could drive position adjustments. If management confirms that trends through year-end are better than seasonal levels, the firm expects a positive stock reaction. At the time of the report, trends in October and the fourth-quarter outlook remained to be seen.
The firm rates Saia Outperform with a 399 dollar price target, based on 28 times its 2027 earnings-per-share forecast. It also notes that an economic slowdown could depress volume growth and reverse pricing momentum, while aggressive expansion and capital spending late in the cycle could limit margins and earnings growth.