Werner Enterprises WERN is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.

Werner is suffering from weak freight demand. Freight conditions remained a challenge, with pressures on supply chains continuing to affect the industry. Conditions started to tighten due to disruptions caused by hurricanes, which exacerbated supply-chain delays and reduced the availability of shipping capacity, impacting freight rates and logistics.

As a result of the weakness in the freight market, management gave a bearish 2024 guidance regarding the Truckload Transportation Services (TTS) segment. For 2024, Werner now anticipates TTS truck growth to decline in the range of 8-6% (prior view: decline 6-3%).

High operating expenses are hurting WERN’s bottom line, challenging its financial stability. The surge in operating expenses was caused by increased labor and fuel costs. In the third quarter of 2024, labor costs, comprising salaries and benefits, accounting for 34.6% of the total operating expenses, amounted to $258.3 million. Fuel costs totaled $64.8 million.

Driver shortage continues to be a major challenge facing the trucking industry. As old drivers retire, trucking companies find it difficult to hire drivers since the job does not appeal to the younger generation.

Partly due to these headwinds, shares of WERN have plunged 15.5% over the past year compared with the industry’s decline of 5.6%.

One-Year Price Comparison

Image Source: Zacks Investment Research

The negative sentiment surrounding the stock is evident from the fact that the Zacks Consensus Estimate for fourth-quarter and full-year 2024 earnings has been revised downward over the past 90 days. The bearish alterations in estimate revisions underscore a notable decline in brokers' confidence in the stock.

Image Source: Zacks Investment Research

Additionally, downbeat earnings expectations cast a shadow over a company’s prospects. For fourth-quarter 2024, LSTR’s earnings are expected to decline 43.6% year over year. For 2024, LSTR’s earnings are expected to decline 64.8% year over year.

WERN’s Zacks Rank and Style Score

Werner currently carries a Zacks Rank #4 (Sell). The company’s current Value Score of D shows its unattractiveness.

Stocks to Consider

Some better-ranked stocks from the Zacks Transportation sector are C.H. Robinson Worldwide, Inc. (CHRW) and Wabtec Corporation WAB. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CHRW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 10.29%.

The Zacks Consensus Estimate for CHRW’s 2024 earnings has been revised 6.4% upward over the past 90 days. CHRW has an expected earnings growth rate of 33.3% for 2024. Shares of CHRW have gained 21.6% so far this year.

WAB has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 9.46%.

The Zacks Consensus Estimate for WAB’s 2024 earnings has been revised 2.5% upward over the past 90 days. WAB has an expected earnings growth rate of 28.55% for 2024. Shares of WAB have gained 49.4% so far this year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report

Wabtec (WAB) : Free Stock Analysis Report

Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research