Werner Enterprises WERN is bolstered by its commitment to promoting women-friendly work culture. Shareholder-friendly initiatives also bode well for the company. However, the freight market downturn is adversely impacting WERN’s prospects.

Factors Favoring WERN

Werner Enterprises’ 2024 Corporate Sustainability Report highlights its commitment to Environmental, Social and Governance (“ESG”) issues. Key achievements include the launch of a Waste and Energy Scorecard, a driver communication plan on inclusion and a new anti-trafficking recognition program. WERN also disclosed Scope 1 emissions and is on track to double intermodal volume in 2025. Werner's goals for 2025 include an audit of ESG processes and launching a Sustainable Procurement Program. For 2028, the company aims to invest 2.5 million training hours for associates.

Werner Enterprises’ recognition as a 2024 “Top Company for Women to Work for in Transportation” highlights its commitment to diversity and inclusion, marking its seventh consecutive year on the list. The company’s initiatives, such as the Women’s Leadership Alliance and a high percentage of female drivers, demonstrate its support for women’s advancement in the industry. This recognition boosts Werner’s reputation, helping attract and retain diverse talent, which can drive innovation and strengthen its competitive edge in the transportation sector.

Werner Enterprises’ consistent and growing dividend payments reflect its strong financial performance and commitment to returning value to shareholders. The company paid $35.1 million in dividends in 2024, following $34.2 million in 2023 and $32.2 million in 2022. The 8% increase in its quarterly dividend rate in both 2023 and 2022 demonstrates confidence in its earnings and long-term stability. This steady dividend approach not only enhances shareholder value but also signals that Werner is financially healthy and focused on generating sustainable returns, which can attract long-term investors.

WERN: Key Risks to Watch

The freight market downturn poses significant challenges to Werner Enterprises’ prospects. As a result, the company’s top line in the fourth quarter of 2024 fell to $754.7 million, missing the Zacks Consensus Estimate of $772 million. This represents an 8.2% year-over-year decline, primarily due to a $52.8 million (9%) drop in Truckload Transportation Services revenues and a $13.8 million (6%) decline in Logistics revenues. The weakness across both business segments underscores the difficulties Werner is facing in the current market environment.

The declining current ratio (a measure of liquidity) for WERN, from 1.96 in the fourth quarter of 2023 to 1.52 in the fourth quarter of 2024, signals a weakening liquidity position. While still above 1, the consistent drop suggests the company may struggle to meet its short-term obligations. This decline could point to rising costs, reduced cash flow or increased short-term debt. If not addressed, it may lead to solvency issues and impact operations.

Owing to such headwinds, WERN shares have declined 17.3% in the past year compared with the Zacks Transportation-Truck industry’s fall of 34.8% in the same period.

Image Source: Zacks Investment Research

WERN’s Zacks Rank

WERN currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Investors interested in the Zacks Transportation sector may also considerSkyWest SKYW and Allegiant ALGT.

SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

SKYW has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 16.7%. Shares of SKYW have risen 8% over the past six months.

Allegiant currently carries a Zacks Rank of 2 (Buy).

ALGT has an expected earnings growth rate of more than 200% for the current year.

The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average surprise is 31.3%. Shares of ALGT have surged 33.1% in the past six months.

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

Allegiant Travel Company (ALGT) : Free Stock Analysis Report

SkyWest, Inc. (SKYW) : Free Stock Analysis Report

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research