Werner Enterprises WERN is grappling with a significant freight market downturn. Weak liquidity is further hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

WERN: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the current quarter’s earnings has been revised 13.3% downward over the past 60 days. The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

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Dim Price Performance:  The company’s price trend reveals that its shares have lost 22.1% over the past year compared with the Transportation - Truck 45.3% decline.

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Unimpressive Earnings Surprise History: WERN has a discouraging earnings surprise history, having missed the Zacks Consensus Estimate in each of the trailing four quarters. The average negative surprise is 42.5%.

Weak Zacks Rank: WERN currently carries a Zacks Rank #5 (Strong Sell).

Bearish Industry Rank: The industry to which Werner Enterprises belongs currently has a Zacks Industry Rank of 237 (out of 247). Such a favorable rank places it in the bottom 4% 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.

Headwinds: Werner Enterprises continues to face significant headwinds due to the ongoing freight market downturn, which has taken a toll on its financial performance. In the fourth quarter of 2024, the company reported revenues of $754.7 million, which fell short of the Zacks Consensus Estimate of $772 million. This marks an 8.2% decline from the same period last year. The drop was due to a $52.8 million (9%) decrease in Truckload Transportation Services revenues and a $13.8 million (6%) decline in Logistics revenues. The broad-based weakness across both segments highlights the tough operating conditions Werner Enterprises is currently navigating.

Werner Enterprises' current ratio (a measure of liquidity) has declined from 1.96 in fourth-quarter 2023 to 1.52 in the fourth quarter of 2024, signaling a weakening ability to cover short-term obligations. Although the ratio remains above the critical threshold of one, the steady decrease raises concerns about potential financial strain. This downward trend may reflect rising costs, diminished cash flow or growing short-term debt. If left unaddressed, it could escalate into broader solvency challenges and negatively affect the company's operational stability.

Stocks to Consider

Investors interested in the Transportation sector may consider Air Transport Services Group ATSG and Expeditors International of Washington EXPD.

Air Transport Services Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ATSG has an expected earnings growth rate of 31% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 6.1%.

Expeditors International of Washington carries a Zacks Rank of 2 at present.

The company has an encouraging track record regarding earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met once. The average surprise is 11.6%.

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Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report

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

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

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