Is Old Dominion Freight Line a Good Investment?

OVERVIEW

Old Dominion Freight Line Incorporation is a company based in the United States. The company operates a trucking service for cargo and freight in the United States. The company operates over 9,000 trucks, over 200 service centers, and around 40 maintenance centers. The company was founded in 1934.

Why You Should?

  1. Old Dominion Freight Line is a great reopening play. The pandemic has shut down a lot of the industrial and commercial economy, something which hurt some aspects of Old Dominion’s revenue and profits. Once these parts of the economy reopen, Old Dominion will see even better numbers. This will benefit the company and investors in the company.
  2. The COVID-19 pandemic has caused a spike in demand for cargo and freight transportation services. Everything from packages to essential PPE and medical equipment needed to be shipped across the nation. This has caused a spike in volumes for Old Dominion Freight Line. This has benefited the company and investors in the company.
  3. Old Dominion Freight Line had some issues before this pandemic due to the trade issues caused by the Trump administration. Under a Biden administration, these trade deals will be renegotiated, which will cause a spike in volumes for Old Dominion. This will benefit the company and investors in the company as well.
  4. Under a Biden administration, there will be more stimulus. This is intended to help the economy reopen. This will cause another spike in the volume of freight for the company. This will benefit the company and investors in the company as well.
  5. The company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has benefited the company’s growth in the past and will continue to benefit the company in the future. This will also benefit investors in the company. In the financial year of 2019, the company reported revenues of around 4.11 billion and profits of around 615 million. Both of these metrics are higher than what the company reported in the financial year of 2018 when they reported revenues of around 4.04 billion and profits of around 604 million.

Why You Should Not?

  1. Old Dominion Freight Line faces tough competition in the freight and cargo transportation industry. Some of these companies include FedEx, UPS, J.B. Hunt, as well as various airlines. This competition might hurt the company in the future. This might also hurt investors in the company.
  2. The pandemic has shut down the industrial and commercial economies around the world. Furthermore, the demand for these products has also declined temporarily. This pandemic has hurt some aspects of the company’s business. This has also hurt investors in the company.

MY OPINION

I think that Old Dominion Freight Line is a good long-term investment due to its good reopening position, impacts from the pandemic, a Biden administration, hopes for more COVID stimulus, and rising revenues and profits. However, tough competition and some of the impacts from the pandemic might hurt the company in the future.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.