Schneider National’s SNDR financial stability is challenged by escalated operating expenses and weak liquidity. Elevated labor costs are also putting a strain on the company’s bottom line, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

SNDR: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 4.2% downward in the past 60 days. For the current year, the consensus mark for earnings has moved 1.2% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Weak Zacks Rank: SNDR currently carries a Zacks Rank #4 (Sell).

Unimpressive Price Performance: SNDR shares have declined 1.4% in the past 30 days compared with the industry’s 1.9% fall.

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Dull Earnings Surprise History: Schneider has a discouraging earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate only once in the trailing four quarters and missed thrice, delivering an average miss of 17.5%.

Bearish Industry Rank: The industry to which SNDR belongs currently has a Zacks Industry Rank of 181 (out of 251). Such an unfavorable rank places it in the bottom 28% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.

Major Headwinds:  The northward movement in operating expenses is hurting Schneider’sbottom line, challenging its financial stability. The surge in operating expenses is primarily caused by increased labor costs. In the second quarter of 2024, total operating expenses rose by 2% compared to the second-quarter 2023 actuals.

Labor costs comprising salaries and benefits, accounting for 28% of the total operating expenses, rose 8.2% year over year. Schneider is grappling with liquidity concerns, impacting its stock. By the end of the second quarter of 2024, the company reported cash and cash equivalents of $103.2 million, which was less than its long-term debt of $125.8 million. This indicates that SNDR does not have enough cash to fulfill its debt obligations.

Stocks to Consider

Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include Ryanair RYAAY and Canadian Pacific Kansas City Limited CP.

Ryanair currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  RYAAY has an expected earnings growth rate of 10% for the current year.

The company has a discouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average miss of 30%. Shares of RYAAY have risen 24% in the past year.

Canadian Pacific carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 0.7% for the current year.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missing once. The average beat is 2.2%. CP shares have rallied 14% in the past year.

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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report

Canadian Pacific Kansas City Limited (CP) : Free Stock Analysis Report

Schneider National, Inc. (SNDR) : Free Stock Analysis Report

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