Marten Transport (MRTN) has reported Q4 2024 results that exceeded earnings expectations. This comes despite declining fuel surcharge revenue and rising operating costs. The company is a leading temperature-sensitive truckload carrier in the U.S., specializing in transporting and distributing food, beverages, and other consumer goods requiring temperature-controlled conditions. It is committed to minimizing the freight market’s impact on its operations and is focused on creating opportunities for profitable growth. The stock is attractively valued and sports a dividend yield of 1.5%, making it an attractive option for income-oriented value investors.
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What Investors Should Know About Marten
Marten Transport, based in Mondovi, Wisconsin, is a leading provider of temperature-sensitive truckload transportation in the United States. It operates under five segments: Truckload, Dedicated, Intermodal, Brokerage, and MRTN de Mexico, delivering expedited services for high-volume customers across the United States, Mexico, and Canada.
The Truckload sector manages the transport of food and other goods that need temperature-regulated or insulated environments. The Dedicated division offers customized transport solutions to meet individual customers’ needs by utilizing temperature-controlled trailers, dry vans, and other specialized equipment. The Intermodal department transports customers’ cargo using refrigerated containers and temperature-controlled trailers on railroad flatcars for parts of the journey, supplemented by tractors and contracted carriers. Lastly, the Brokerage division establishes contractual agreements with third-party carriers to haul freight for customers in temperature-controlled trailers and dry vans.
As of the end of 2023, Marten Transport operated a fleet of 3,349 tractors, which includes 3,255 company-owned tractors and 94 tractors supplied by independent contractors.
Substantial Quarter-Over-Quarter Improvement
Marten Transport has announced its fourth-quarter results, with net income of $5.6 million, reflecting a 50.1% improvement from the third quarter. However, this figure represents a decline compared to the same quarter in 2023, when the reported net income was $12.4 million.
The company also experienced a decline in its operating revenue for the fourth quarter of 2024, reporting $230.4 million compared to $268.2 million in 2023. Nevertheless, operating income improved sequentially, reaching $6.7 million in the fourth quarter of 2024, marking a 57.6% increase from the third quarter.
Operating expenses as a percentage of operating revenue also increased to 97.1% in the fourth quarter of 2024, compared to 94.2% in the same quarter of 2023. Still, the GAAP earnings per share (EPS) of $0.07 beat analysts’ expectations by $0.01.
Value and Momentum
The stock has been rangebound over the past few years, eking out a 1.43% return over the past three years. It trades in the lower half of its 52-week price range of $14.96 – $20.24 and shows signs of positive momentum as it trades above its 20-day (16.01) and 50-day (16.26) moving averages. Its P/S ratio of 1.32x sits at a relative discount compared to the Industrials sector average of 1.58x.
Analysts following the company have taken a cautiously optimistic view of MRTN stock. Most recently, Stephens analyst Daniel Imbro, a five-star analyst according to Tipranks’ ratings, raised the price target on the shares to $19 (from $18) and reiterated an Overweight rating, noting Q4 EPS that beat the consensus forecast driven by better-than-anticipated margin leverage in both trucking segments.
Marten Transport is rated a Moderate Buy overall, based on the recent recommendations of two analysts. The average price target for MRTN stock is $19.00, representing a potential upside of 21.10% from current levels.
Bottom Line on MRTN
Marten Transport has shown solid quarter-over-quarter improvement. This achievement comes amidst challenging circumstances, including declining fuel surcharge revenue and rising operating costs. Despite some decrease in operating revenue and an increase in operating expense ratios, the company’s Q4 net income surged by over 50% compared to Q3, and its EPS surpassed analysts’ forecasts. Marten Transport’s shares currently present an attractive dividend yield and promising growth potential, making it a compelling option for value and income-focused investors.
